A Stock Has a Current Dividend of $0

question 50

Multiple Choice

A stock has a current dividend of $0.32 with a growth rate of 8% annually. Assuming a 10% annual discount rate, what should the price of the stock be one year from today?

• A)$18.66
• B)$16.00
• C)$17.28
• D)$3.20

---

Definitions:

Retained Earnings

The portion of a company's profits that are not distributed as dividends to shareholders but are kept by the company for reinvestment.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders.

Dividends

Payments made by a corporation to its shareholder members. It is the share of profits and retained earnings that the company pays out to its shareholders.

Net Loss

The amount by which a company's total expenses exceed its total revenues, indicating a negative financial performance.