Wheathouse Bakery Just Paid a Dividend of $2

question 56

Multiple Choice

Wheathouse Bakery just paid a dividend of $2.50.They expect the dividends to grow at 15 percent per year for next three years,and then they expect the dividends to remain constant forever.The appropriate discount rate for this firm is 20 percent.What should be the current market price of the stock?

• A) $15.69
• B) $17.50
• C) $17.89
• D) $19.01
• E) $22.16

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Definitions:

Marginal Cost

The cost incurred by producing one additional unit of a good or service.

Lack of Response

The absence of a reaction or reply to a communication or situation, often indicating disinterest or avoidance.

Critical Evaluation

involves analyzing and assessing the merits and faults of something in detail to understand its value, quality, or importance.

Centralized Communication Network

A pattern of interaction in which communication flows only between individual members and a hub, or centre point.