What Is the Value of the Expected Dividend Per Share

question 121

Multiple Choice

What is the value of the expected dividend per share for a stock that has a required return of 16 percent, a price of $45, and a constant growth rate of 12 percent?

• A)$1.80
• B)$3.60
• C)$4.50
• D)$7.20

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Definitions:

Income Statement

A document detailing a business's income, expenditures, and earnings during a designated timeframe.

Solvency

The ability of a company or individual to meet its long-term financial obligations and continue operating in the long term.

Price-Earnings Ratio

A valuation metric for companies, calculated by dividing a company's share price by its earnings per share.

Earnings

The amount by which revenues exceed expenses.