Laurentide Union Bank Is Expected to Pay a Dividend of $4.20

question 28

Multiple Choice

Laurentide Union Bank is expected to pay a dividend of $4.20 per common share in one year.The dividend is expected to grow at a rate of 5% for the foreseeable.If the current market price for a share of Laurentide Union Bank is $40, what is the cost of equity?

• A)5.00%
• B)9.52%
• C)10.50%
• D)15.50%

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Definitions:

Elastic

describes a situation where the quantity demanded or supplied changes significantly in response to price changes.

Total Revenue

The entire amount of income generated by the sale of goods or services before any expenses are deducted.

Price Lowered

A reduction in the cost of goods or services.

Total Revenue

The total amount of money a firm receives from sales of its products or services before any expenses are subtracted.