The Sly Fox Pays a Constant Dividend of $1

question 3

Multiple Choice

The Sly Fox pays a constant dividend of $1.46 a share. The company announced today that it will continue to pay the dividend for another 2 years and then in Year 3 it will pay a final liquidating dividend of $15.25 a share. What is one share of this stock worth today at a required return of 18.5 percent?

• A) $12.92
• B) $11.44
• C) $12.07
• D) $13.09
• E) $14.20

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Definitions:

Infrastructure

The basic physical and organizational structures and facilities, such as buildings, roads, and power supplies, essential for the functioning of a society or business.

Capital

Capital typically refers to financial assets or the financial value of assets, such as funds held in deposit accounts and/or the physical factories and machinery.

Physical Capital

Assets used in the production process, including machinery, buildings, and equipment.

Nonresidential Structures

These refer to buildings and facilities not used for housing, such as offices, factories, and shopping centers.