A Stock Is Currently Priced at $65 Per Share and Will

question 26

Multiple Choice

A stock is currently priced at $65 per share and will pay a $4 dividend in one year.What must the stock sell for in one year to meet investors' expectations of a 15% after-tax yield if dividends are taxed at 28%? Ignore capital gains taxes due to investor timing.

• A)$70.75
• B)$71.87
• C)$73.63
• D)$76.00 After-tax return =

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Definitions:

Stream Velocities

The speed at which water flows in a stream or river, influenced by slope, channel shape, and volume of water.

Suspension

A mode of sediment transport in which water or wind picks up and carries the sediment as floating particles.

Deposition

The process where material is laid down or settles in a new location.

Gradient

A measure of the steepness or incline of a surface, often expressed as a ratio of vertical rise to horizontal distance.