What Is the Current Value of a Share of Augat

question 30

Multiple Choice

What is the current value of a share of Augat common stock if its current dividend is $1.50 and dividends are expected to grow at the annual compound growth rate of 20 percent into the foreseeable future? Assume the investor has a required rate of return of 15 percent, and expects to sell the security in 5 years.

• A)$56.87
• B)$30.00
• C)$25.00
• D)The constant growth rate model cannot be used because the growth rate is greater than the required rate of return.

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Definitions:

Wilhelm Wundt

Often recognized as the father of experimental psychology, he founded the first formal psychology laboratory in Leipzig, Germany, in 1879.

Titchener

Edward Titchener, a psychologist who founded structuralism, a theory focused on breaking down mental processes into the most basic components.

Sigmund Freud

An Austrian neurologist known for founding psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Nervous Disorders

A broad range of conditions that affect the nervous system, causing symptoms like pain, cognitive dysfunctions, and motor disturbances.