If the Dividend Yield for Year One Is Expected to Be

question 75

Multiple Choice

If the dividend yield for year one is expected to be 5 percent based on the current price of $25, what will the year four dividend be if dividends grow at a constant 6 percent?

• A)$1.33
• B)$1.49
• C)$1.58
• D)$1.67

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Definitions:

Open Account

A credit arrangement where goods or services are sold without immediate payment, allowing the buyer to pay at a later scheduled date.

EOQ Model

The Economic Order Quantity model is used to determine the optimal order size to minimize the sum of ordering, carrying, and stockout costs.

Reorder Points

The inventory level at which a new order should be placed to replenish stock before it runs out, avoiding stockouts and production delays.

Carrying Costs

The complete expense associated with keeping inventory, encompassing storage fees, insurance, and the cost of missed opportunities.