An Issue of Common Stock Has Just Paid a Dividend

question 100

Multiple Choice

An issue of common stock has just paid a dividend of $3.75.Its growth rate is 8%.What is its price if the market's rate of return is 16%?

• A) $25.01
• B) $46.88
• C) $50.63
• D) $54.38

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Definitions:

Dividends Payable

A liability on a company's balance sheet that indicates the amount of dividends it owes to shareholders, to be paid out in the future.

Cash Flow Statement

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

Operating Activities

Generally speaking, activities that affect current assets, current liabilities, or net income.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not considered cash equivalents.