You Are Trying to Determine the Appropriate Price to Pay

question 69

Multiple Choice

You are trying to determine the appropriate price to pay for a share of common stock. If you purchase this stock, you plan to hold it for 1 year. At the end of the year you expect to receive a dividend of $5.50 and to sell the stock for $154. The appropriate rate of return for this stock is 16 percent. What should the current price of this stock be?

• A)$150.22
• B)$162.18
• C)$137.50
• D)$98.25
• E)$175.83

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