Davis Brothers Incorporated Is an Apparel Manufacturer That Paid a $1.50

question 75

Multiple Choice

Davis Brothers Incorporated is an apparel manufacturer that paid a $1.50 dividend yesterday.Analysts expect dividends to grow at a constant 20 percent per year for the next four years.From that point forward,dividends are expected to grow at a constant rate of 12 percent forever.The discount rate for a firm of this risk is 15 percent.What should be the current stock price?

• A) $65.96
• B) $58.23
• C) $103.68
• D) $73.07
• E) $106.79

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Definitions:

Semi-circular Canals

Three fluid-filled bony channels in the inner ear that are involved in maintaining balance and sensing rotational movements.

Balance

The state of having equal distribution of weight enabling someone or something to remain upright and steady.

Basilar Membrane

A key structure within the cochlea of the inner ear, involved in the detection of sound frequencies.

Ossicles

Small bones in the middle ear that play a key role in the process of hearing by transmitting sound vibrations.