Cache Creek Manufacturing Company Is Expected to Pay a Dividend

question 72

Multiple Choice

Cache Creek Manufacturing Company is expected to pay a dividend of $3.36 in the upcoming year.Dividends are expected to grow at 8% per year.The riskfree rate of return is 4% and the expected return on the market portfolio is 14%.Investors use the CAPM to compute the market capitalization rate,and the constant growth DDM to determine the value of the stock.The stock's current price is $84.00.Using the constant growth DDM,the market capitalization rate is _________.

• A) 9%
• B) 12%
• C) 14%
• D) 18%

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Definitions:

Spanish Established

Refers to institutions, settlements, or cultural practices founded or brought to regions around the world by the Spanish during their explorations and conquests.

Declaration of Independence

A foundational document proclaimed on July 4, 1776, declaring the thirteen American colonies' independence from British rule.

French and Indian War

A conflict between Great Britain and France (1754-1763) in North America, part of a larger imperial struggle, the Seven Years' War, involving native American allies on both sides.

French Blockade

The use of naval forces by France to prevent ships from entering or leaving port, particularly during the Napoleonic Wars, as a means to weaken enemy countries economically.