Exhibit 11.7 Use the Information Below for the Following Problem(S)

question 23

Multiple Choice

Exhibit 11.7
Use the Information Below for the Following Problem(S)
Consider a firm that has just paid a dividend of $1.5. An analyst expects dividends to grow at a rate of 9% per year for the next three years. After that dividends are expected to grow at a normal rate of 5% per year. Assume that the appropriate discount rate is 7%.
-Refer to Exhibit 11.7.The price of the stock today (P?) is

• A) $84.81
• B) $87.81
• C) $91.09
• D) $94.32
• E) $97.61

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Definitions:

Cochlea

A spiral-shaped, fluid-filled inner ear structure essential for hearing.

Cochlear Nerve

A nerve responsible for transmitting auditory information from the cochlea of the inner ear to the brain.

Sensorineural Deafness

A type of hearing loss that occurs due to damage to the inner ear or to the pathway from the inner ear to the brain.

Hair Cells

Sensory cells located in the inner ear, responsible for converting sound waves into electrical signals that go to the brain.