J&J Tools Pays No Dividend at the Present Time

question 172

Multiple Choice

J&J Tools pays no dividend at the present time. The company plans to start paying an annual dividend in the amount of $.25 a share for 3 years commencing next year. After the 3 years, the
Company plans on paying a constant $1 a share dividend indefinitely. How much are you willing to
Pay to buy a share of this stock if your required return is 13%?

• A) $4.72
• B) $4.99
• C) $5.45
• D) $5.92
• E) $6.35

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Definitions:

Opponents

Opponents are individuals or groups that compete against or hold differing views from another in a conflict, competition, or debate.

Defoliants

Chemicals used to remove the leaves from trees and plants, often used in agriculture to control weeds, and militarily to increase visibility in combat zones, such as in the Vietnam War.

1,000,000 Pounds

A monetary value in British currency, often used to denote a significant sum of money.

Local Villagers

Residents of a small rural community or village, typically characterized by a close-knit social structure and a reliance on local resources for livelihood.