Modular Systems Inc

question 57

Multiple Choice

Modular Systems Inc.just paid dividend D0, and it is expecting both earnings and dividends to grow by 0 percent in Year 2, by 5 percent in Year 3, and at a rate of 10 percent in Year 4 and thereafter.The required return on Modular is 15 percent, and it sells at its equilibrium price, P0 = R49.87.What is the expected value of the next dividend? (Hint: Set up and solve an equation with the unknown.)

• A) It cannot be estimated without more data.
• B) R1.35
• C) R1.85
• D) R2.35
• E) R2.85

---

Definitions:

Divergent Boundary

A plate-tectonic boundary in which two plates move apart (diverge) relative to one another.

Convergent Boundary

A tectonic plate boundary where two plates move toward each other, often resulting in mountain building, earthquakes, or volcanic activity.

Transform Boundary

A type of tectonic plate boundary where two plates slide past each other horizontally.

Seafloor Spreading

The process by which new oceanic crust is formed at mid-ocean ridges and slowly moves away from the ridge, contributing to continental drift.