What Should Be the Price for a Common Stock Paying

question 53

Multiple Choice

What should be the price for a common stock paying $3.50 annually in dividends if the growth rate is zero and the discount rate is 8 percent?

• A)$22.86
• B)$28.00
• C)$42.00
• D)$43.75 P_o =

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Definitions:

Inventory Model

An analytical approach or mathematical formula used to manage and control stock levels, optimizing inventory costs and meeting demand.

Ordering Cost

The cost of the ordering process.

Carrying Cost

Carrying cost refers to the total cost of holding inventory, including storage, insurance, spoilage, and opportunity costs.

Virtual Retailer

A business that sells goods or services online rather than through a physical storefront.