Assume That at the End of the Next Year,Company a Will

question 78

Multiple Choice

Assume that at the end of the next year,Company A will pay a $2.00 dividend per share,an increase from the current dividend of $1.50 per share.After that,the dividend is expected to increase at a constant rate of 5%.If you require a 12% return on the stock,the value of the stock is ________.

• A) $28.57
• B) $28.79
• C) $30.00
• D) $31.78
• E) none of these

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Definitions:

Variable Labor

The aspect of labor costs that varies with the level of production or business activity within a given period.

Fixed Capital

Refers to the long-term assets used in production, including buildings, machinery, and equipment, which are not frequently replaced.

Total Variable Cost

The total of expenses that change in proportion to the activity or production level of a business.

Economic Costs

The total cost of choosing one action over another, including both explicit and implicit costs.