The Current Price of Zebar Is $32

question 43

Multiple Choice

The current price of Zebar is $32.00 and the current dividend is $.60.What is an investor's required rate of return on Zebar if dividends are expected to grow perpetually at a compound annual rate of 8 percent?

• A)9.88%
• B)11.38%
• C)18.75%
• D)10.03%

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Definitions:

NPV Projects

Projects evaluated using Net Present Value, a method for determining the present value of future cash flows, minus the initial investment.

Compromise Policy

A strategy or decision that is made by finding a middle ground between two opposing positions or interests.

Dividend Cuts

Dividend cuts occur when a company reduces the size of the dividend payments to its shareholders, often as a response to financial difficulties or the need to conserve cash.