You Are Considering the Purchase of a Common Stock That

question 120

Multiple Choice

You are considering the purchase of a common stock that just paid a dividend of $2.00.You expect this stock to have a growth rate of 30 percent for the next 3 years,then to have a long-run normal growth rate of 10 percent thereafter.If you require a 15 percent rate of return,how much should you be willing to pay for this stock?

• A) $71.26
• B) $97.50
• C) $82.46
• D) $79.15
• E) $62.68

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Definitions:

Modern IQ Tests

Assessments designed to measure intelligence and cognitive ability using contemporary methodologies and norms.

Mean

A statistical measure representing the central or typical value in a set of data, calculated by dividing the sum of all values by the number of values.

Correlations

Statistical measures that describe the extent to which two or more variables fluctuate together, indicating a relationship but not causation.

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Evaluations of a student's performance or achievement in academic subjects, often in the form of letters or numbers.