How Much of a Stock's $30 Price Is Reflected in PVGO

question 13

Multiple Choice

How much of a stock's $30 price is reflected in PVGO if it expects to earn $4 per share, has an expected dividend of $2.50, and a required return of 20 percent?

• A)$0
• B)$6.00
• C)$8.00
• D)$10.00 P = $4/.2 if all earnings paid as dividends

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Definitions:

Weighted-Average Shares

The number of shares outstanding adjusted for changes in share capital, used in calculating earnings per share over a reporting period.

Retained Earnings Statement

A financial statement that outlines the changes in retained earnings for a company over a specific period.

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of the shareholders.

Net Income

The total earnings of a company after subtracting all expenses and losses from total revenue.