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

question 20

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 future price of the stock in year 3 is

• A) $81.75
• B) $84.81
• C) $92.56
• D) $101.85
• E) $111.16

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Definitions:

Auditory Tubes

The auditory tubes, also known as Eustachian tubes, are canals connecting the middle ear with the nasopharynx, equalizing pressure on either side of the eardrum.

Nasopharynx

The nasopharynx is the upper part of the pharynx, located behind the nose and above the soft palate.

Systemic Respiration

The overall process of gas exchange between the external environment and an organism's circulatory system, including inhalation, exchange of gases in the lungs, and oxygenation of tissues.

Cellular Respiration

The metabolic process in cells where biochemical energy from nutrients is converted into adenosine triphosphate (ATP), releasing waste products.