Boomer Products, Inc

question 357

Multiple Choice

Boomer Products, Inc. manufactures "no-inhale" cigarettes. As its target customers age and pass on, sales of the product are expected to decline. Thus, demographics suggest that earnings and
Dividends will decline at a rate of 4% annually forever. The firm just paid a dividend of $2.50; given
A required return is 12%, the price of the stock in two years will be:

• A) $9.45
• B) $11.52
• C) $13.82
• D) $14.98
• E) $29.95

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Definitions:

Social Variable

An element that can vary among individuals within a society, such as income, education level, or age, influencing behaviors and social outcomes.