A Stock Is Expected to Pay $1

question 30

Multiple Choice

A stock is expected to pay $1.25 per share every year indefinitely and the equity cost of capital for the company is 7.5%.What price would an investor be expected to pay per share ten years in the future?

• A)$16.67
• B)$25.01
• C)$33.34
• D)$41.68
• E)$12.50

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Definitions:

Direct Labour Time

The actual time workers spend on the production floor directly working on products or services.

Standard Costing System

An accounting method that uses standard costs for costing inventory and measuring efficiency.

Board Metres

A unit of measure used in the lumber industry to quantify the volume of wood.

Ideal Standards

Theoretical cost benchmarks assuming perfect operating conditions, used for planning and control.