The Lighthouse Co

question 72

Multiple Choice

The Lighthouse Co. is in a downsizing mode. The company paid a $2.50 annual dividend last year. The company has announced plans to lower the dividend by $.50 a year. Once the dividend amount becomes zero,the company will cease all dividends permanently. The required rate of return is 16%. What is one share of this stock worth?

• A) $3.76
• B) $4.08
• C) $4.87
• D) $5.13
• E) $5.39

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Definitions:

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