Cellular Talk Is a New fiRm in a Rapidly Growing

question 360

Multiple Choice

Cellular Talk is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 25% a year for the next three years and then decreasing the growth rate to 6%
Per year. The company just paid its annual dividend in the amount of $0.80 per share. What is the
Current value of one share of this stock if the required rate of return is 17%?

• A) $11.17
• B) $12.14
• C) $12.94
• D) $14.27
• E) $15.06

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Definitions:

Recorded Equity

The total amount of owners' equity recorded in the financial statements, representing the residual interest in the assets of a company after deducting liabilities.