Static Inc

question 103

Multiple Choice

Static Inc. has had a hard time recently. In order to help the firm survive a downturn in the market for its products, management has announced that it doesn't plan to pay dividends for the next three years. A modest dividend of $2.00 is projected for the fourth year after which dividends are expected to grow at 5% indefinitely. Similar stocks return 10%. How much should Static's stock sell for today?

• A)$30.05
• B)$20.00
• C)$40.00
• D)$28.69

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Definitions:

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