Whistle Stop Pays a Constant Annual Dividend of $4 on Its

question 10

Multiple Choice

Whistle Stop pays a constant annual dividend of $4 on its stock. The company will maintain this dividend for the next 3 years and will then cease paying dividends forever. What is the current price per share if the required return on this stock is 15.6 percent?

• A) $10.38
• B) $9.52
• C) $9.04
• D) $9.28
• E) $10.02

---

Definitions:

Chance

The occurrence of events in the absence of any obvious intention or cause.

Labor Unions

Organizations that represent the collective interests of workers in negotiations with employers over wages, benefits, and working conditions.

Labor Demanded

The total quantity of workers that employers are willing to hire at a given wage rate in a certain period.

Efficiency Wages

Wages set above the market equilibrium level by employers to increase productivity, discourage turnover, and attract better talent.