DT Motors Paid Its First Annual Dividend Yesterday in the Amount

question 44

Multiple Choice

DT Motors paid its first annual dividend yesterday in the amount of $.15 a share. The company plans to double the dividend in each of the next 3 years. Starting in Year 4, the firm plans to pay $1.50 a share indefinitely. What is one share of this stock worth today if the market rate of return on similar securities is 13.8 percent?

• A) $11.02
• B) $10.77
• C) $8.92
• D) $10.26
• E) $11.79

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Definitions:

Levels-Of-Processing Principle

A theory suggesting the depth of mental processing affects memory recall, with deeper levels of analysis producing more durable memory traces.

Method of Loci

A mnemonic technique that involves imagining placing items to be remembered in specific locations within a familiar place.

Von Restorff Effect

The tendency to remember unusual or distinctive items more easily than common items.

Working Memory

A cognitive system with a limited capacity that is responsible for temporarily holding information available for processing tasks such as reasoning and comprehension.