ABC Common Stock Is Expected to Have Extraordinary Growth of 20

question 59

Multiple Choice

ABC common stock is expected to have extraordinary growth of 20 percent per year for two years, at which time the growth rate will settle into a constant 6 percent.If the discount rate is 15 percent and the most recent dividend was $2.50, what should be the current share price?

• A)$31.16
• B)$33.23
• C)$37.39
• D)$47.77

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Definitions:

Managers

Individuals responsible for planning, directing, and overseeing the operations and fiscal health of a business unit or department.

Balanced Scorecard

A management and planning system designed to align an organization’s activities with its vision and strategy, enhance communication within and outside the organization, and track the organization's performance in comparison to its strategic objectives.

Performance Measure

Metrics or indicators used to assess and quantify the efficiency, effectiveness, and performance of an organization or individual.

Improvement

The process of making something better or increasing its value, often referring to property or performance enhancements.