A Stock You Are Interested in Paid a Dividend of $1

question 51

Multiple Choice

A stock you are interested in paid a dividend of $1 last week. The anticipated growth rate in dividends and earnings is 20% for the next year and 10% the year after that before settling down to a constant 5% growth rate. The discount rate is 12%. Calculate the expected price of the stock.

• A) $17.20
• B) $17.90
• C) $18.20
• D) $19.40
• E) $19.75

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Definitions:

AIDS

Acquired Immunodeficiency Syndrome, a chronic, life-threatening condition caused by the human immunodeficiency virus (HIV).

Cancer Cells

Abnormal cells that divide uncontrollably and have the potential to invade or spread to other parts of the body.

HIV

Human Immunodeficiency Virus (HIV) is a virus that attacks and weakens the immune system, leading to a progressive failure of immune response and increased susceptibility to infections and diseases.

AIDS

Acquired Immunodeficiency Syndrome, a life-threatening condition caused by the human immunodeficiency virus (HIV), leading to a severe weakening of the immune system.