Titanium World Inc

question 57

Multiple Choice

Titanium World Inc. ,which is a firm that makes specialized golf clubs,plans to pay a dividend of $2 per share at the end of this year;the following year's dividend is expected to be $3 per share;the dividend the year after is expected to be $5;and,after that point,dividends should increase at a constant rate of 10 percent each year forever.The appropriate discount rate for Titanium World is 15 percent.What is the per share value of Titanium World's stock?

• A) $70.19
• B) $110.00
• C) $62.89
• D) $79.62
• E) $80.72

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Definitions:

Demand Curve

A graphic representation showing how the quantity demanded of a good or service varies with its price.

Marginal Cost

The hike in complete costing that comes with the fabrication of an additional unit of a good or service.

Competitive Buyer

A buyer in a market who cannot influence the market price and takes the price as given.

Marginal Expenditure

The rise in expense from obtaining one more unit of a good or service.