Suppose the Pale Hose Corp

question 314

Multiple Choice

Suppose the Pale Hose Corp. is expected to pay a dividend next year of $1.75 per share. Both sales and profits for Pale Hose are expected to grow at a rate of 15% for the following two years and then
At 2% per year thereafter indefinitely. Dividend growth is expected to match sales growth. If the
Required return is 14%, what is the value of a share of Pale Hose?

• A) $16.49
• B) $16.98
• C) $17.92
• D) $18.49
• E) $19.76

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Definitions:

Extinction

In psychology, the gradual weakening and eventual disappearance of a conditioned response; in biology, the dying out of a species.

Vocalizations

The sounds produced by the vocal cords, including speech, cries, or other vocal output.

Infant

A young child in the earliest period of life, especially from birth to one year old.

Classical Conditioning

A training method where two different stimuli are paired repeatedly, leading to a response initially triggered by the second stimulus being ultimately triggered by the first stimulus alone.