Exhibit 11.4 Use the Information Below for the Following Problem(S)

question 33

Multiple Choice

Exhibit 11.4
Use the Information Below for the Following Problem(S)
Davenport Corporation's last dividend was $2.70 and the directors expect to maintain the historic 3 percent annual rate of growth. You plan to purchase the stock today because you feel that the growth rate will increase to 5 percent for the next three years and the stock will then reach $25 per share.
-Refer to Exhibit 11.4.How much should you be willing to pay for the stock if you feel that the 5 percent growth rate can be maintained indefinitely and you require a 17 percent return?

• A) $22.16
• B) $19.28
• C) $21.32
• D) $23.63
• E) $25.46

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Definitions:

Piaget

A reference to Jean Piaget, a Swiss psychologist known for his pioneering work in child development and cognitive theory.

Cognitive Development

The process of growth and change in intellectual abilities, including thinking, reasoning, problem-solving, and understanding complex concepts.

Fine Motor Skills

The ability to use small muscle groups for detailed movements, such as writing or buttoning.

Centration

The tendency to focus on one part of a stimulus, situation, or idea and exclude all others; a characteristic of preoperational reasoning.