Clonly Corp's Stock Pays a Dividend of $1

question 130

Multiple Choice

Clonly Corp's stock pays a dividend of $1.40 and is currently selling for $25, but has not grown in several years. Management feels that 10% growth is possible if the firm discontinues its dividend entirely. Harry owns 6,000 and wants to maintain a constant income stream. How many shares will he have to sell to make up for the first unpaid dividend if Clonly stops paying dividends and starts growing at 10%? Ignore transaction costs and taxes.

• A)305
• B)336
• C)240
• D)280

---

Definitions:

Accounts Receivable

Financial obligations of customers towards a business for delivered goods or services pending payment.

Projected Ending

An estimated conclusion or final figure, such as a financial balance, expected at the end of a defined period based on current trends or calculations.

External Funding Requirement

The need for additional capital from outside sources to finance a company’s operations or growth.

Growth In Assets

An increase in the value or quantity of the assets owned by a company or individual, which can contribute to increased wealth or investment capacity.