How Much of a Stock's $30 Price Is Reflected in PRESENT

question 103

Multiple Choice

How much of a stock's $30 price is reflected in PRESENT VALUE OF GROWTH OPPORTUNITIES if it expects to earn $4 per share, has an expected dividend of $2.50, and a required return of 20 percent?

• A)$0
• B)$6.00
• C)$8.00
• D)$10.00

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Definitions:

Extending Reductions

The process of increasing the scope or duration of cost-cutting or resource-saving measures.

Deep Water Exploration

The process of investigating and exploring the seabed and sub-sea layers in oceanic environments at great depths for resources or scientific research.

Company Profits

The financial gain that a company obtains after deducting all its expenses from its total revenues.

Restructuring

The process of altering the organizational, operational, or financial setup of a company to make it more profitable, efficient, or better organized for its current needs.