The Last Annual Dividend Paid by New Technologies Was $1

question 37

Multiple Choice

The last annual dividend paid by New Technologies was $1.40 a share. Dividends for the next 3 years will be increased at an annual rate of 8 percent. After that, dividends are expected to increase by 3 percent each year. The discount rate is 16 percent. What is the current value of this stock?

• A)$10.40
• B)$12.60
• C)$13.33
• D)$14.10
• E)$15.55

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Definitions:

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An organized political community under one government; a nation or territory.

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Individuals or companies that undertake the preliminary activities of organizing or setting up a new business or venture.

Preincorporation Contract

An agreement made by the promoters of a company before it is legally incorporated.

Liable

Having legal responsibility or obligation.