Todd Mountain Development Corporation Is Expected to Pay a Dividend

question 88

Multiple Choice

Todd Mountain Development Corporation is expected to pay a dividend of $3.00 in the upcoming year.Dividends are expected to grow at the rate of 8% per year.The risk-free rate of return is 5% and the expected return on the market portfolio is 17%.The stock of Todd Mountain Development Corporation has a beta of 0.75.Using the constant growth DDM,the intrinsic value of the stock is _________.

• A) 4.00
• B) 17.65
• C) 37.50
• D) 50.00

---

Definitions:

Equivalent Units

Equivalent units are a concept used in cost accounting to express the amount of work done on partially finished goods in terms of fully completed units.

Bottling Department

A segment of a manufacturing facility where products, typically liquids, are placed into bottles for distribution.

Energy Consumed

The total amount of energy used by a process, system, or device, typically measured in units like kilowatt-hours or joules.

First-in, First-out Method

An inventory costing method where the first items purchased or produced are the first ones sold, assuming that older inventory is sold before newer stock.