Suppose a Stock Is Not Currently Paying Dividends,and Its Management

question 71

Multiple Choice

Suppose a stock is not currently paying dividends,and its management has announced that it will not pay a dividend for at least 5 years,but that it does expect to start paying dividends sometime in the future.Under these conditions,which of the following statements is correct?

• A) Since it is expected to someday pay dividends,the value of the stock today can be found with this equation: P₀ = /(r − g).
• B) The value of the stock cannot be found,even theoretically,by finding the present value of expected future dividends.
• C) According to the text,such a stock should have a value of zero.Any actual value could only come from bids by people who want to control the company in order to draw salaries.
• D) The value of the stock could be found by DCF procedures,but we would have to insert zeros for until such time as we expect the company to begin paying dividends.

Identify the role and requirements of the UCC in governing sales contracts and warranties.

Analyze the statutory limitations for bringing a lawsuit under a breach of contract governed by the UCC.

Evaluate the conditions under which a warranty claim can be made or waived.

Determine the impact of seller statements and how they can constitute a warranty.

---

Definitions:

Leisure

Free time available for enjoyment and relaxation away from one's duties or work.

Consumption

The process by which goods and services are used and expended by individuals or businesses.

Nonlabor Income

Income received from sources other than employment or work, such as investments, pensions, or gifts.

Bushel

A bushel is a unit of volume that is used primarily for measuring quantities of agricultural produce, such as grains, fruits, and vegetables.