If a Stock's Dividend Is Expected to Grow at a Constant

question 186

Multiple Choice

If a stock's dividend is expected to grow at a constant rate of eight percent in the future and it has just paid a dividend of $1.25 a share, and you have an alternative investment of equal risk that will earn a 12 percent rate of return, what would you be willing to pay per share for this stock today?

• A)$31.25
• B)$1.40
• C)$1.25
• D)$1.12

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Definitions:

Recruiters

Professionals who seek out, interview, and select applicants for employment, often for specific positions within a company or organization.

Essential Information

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Applicant Tracking System

A software application that enables the electronic handling of recruitment needs, streamlining the hiring process by sorting through resumes.