The Growth in Dividends of XYZ,Inc

question 33

Multiple Choice

The growth in dividends of XYZ,Inc.is expected to be 10%/year for the next two years,followed by a growth rate of 5%/year for three years;after this five year period,the growth in dividends is expected to be 2%/year,indefinitely.The required rate of return on XYZ,Inc.is 12%.Last year's dividends per share were $2.00.What should the stock sell for today?

• A) $8.99
• B) $25.21
• C) $40.00
• D) $110.00
• E) none of these

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Definitions:

Order Filling

The process of completing customer orders by retrieving the required products and preparing them for delivery.

Product Margins

The difference between the selling price of a product and the cost associated with producing it, indicating the profit generated per product sold.

Overhead Cost

Expenses not directly tied to production, such as rent, utilities, and administrative salaries.

Product S1

A designated product, referred to as S1, typically used in examples or scenarios within the context of costing or managerial accounting.