Stock X Paid a Dividend of $2

question 102

Multiple Choice

Stock X paid a dividend of $2.50 yesterday. It is expected to grow at 7% indefinitely. X's return generally responds to market changes twice as much as does the average stock. Treasury bills currently yield 8%. The market is yielding 11%. What should X sell for today?

• A)$38.21
• B)$32.14
• C)$17.21
• D)$35.71

---

Definitions:

FIFO Method

An inventory valuation method where the first goods purchased are the first ones to be sold, "First In, First Out".

Days In Inventory

Days in inventory is a financial metric indicating how long it takes for a company to turn its inventory into sales.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period.

Replacement Cost

The cost to replace an asset or item at its current market price.