You Are Trying to Determine the Appropriate Price to Pay

question 51

Multiple Choice

You are trying to determine the appropriate price to pay for an ordinary share.If you purchase this share, you plan to hold it for 1 year.At the end of the year you expect to receive a dividend of R5.50 and to sell the share for R154.The appropriate rate of return for this share is 16 percent.What should be the current price of this share?

• A) R137.50
• B) R150.22
• C) R162.18
• D) R98.25
• E) R175.83

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Definitions:

Triangular Trade

A historical term that describes a system of trading in which a country pays for its imports from one country by its exports to another, often involving the exchange of slaves, goods, and raw materials between the Americas, Europe, and Africa.

Economic Impact

The effect of an event, policy, or business activity on the economy of a region or country, including factors like job creation, GDP growth, or market fluctuations.

New England

A region in the northeastern United States comprising six states (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont), known for its colonial history and distinct seasonal climates.

Anglo-American Elites

Individuals of English descent who hold significant economic, political, or social power in the United States.