Bill Bailey and Sons Pays No Dividend at the Present

question 66

Multiple Choice

Bill Bailey and Sons pays no dividend at the present time. The company plans to start paying an annual dividend in the amount of $.30 a share for two years commencing two years from today. After that time,the company plans on paying a constant $1 a share dividend indefinitely. Given a required return of 14%,what is the value of this stock?

• A) $4.82
• B) $5.25
• C) $5.39
• D) $5.46
• E) $5.58

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Definitions:

Negligence

Not acting with the care expected from a reasonably prudent person in identical situations.

Cattle Feed

Food specifically prepared and provided for the nourishment and growth of cattle.

Poisoned Feed

A harmful or toxic compound mixed with livestock feed that can damage or kill animals.

Strict Liability

Legal responsibility for damages or injury, regardless of the presence of fault or negligence.