You Buy a Stock for Which You Expect to Receive

question 61

Multiple Choice

You buy a stock for which you expect to receive an annual dividend of $2.10 for the ten years that you plan on holding it.After 10 years,you expect to sell the stock for $26.15.What is the present value of a share for this company if you want an 8% return?

• A)$7.72
• B)$15.97
• C)$26.20
• D)$31.41

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Definitions:

First-In, First-Out

An inventory valuation method where the oldest items are sold or used first.

Cost of Goods Sold

An accounting term that refers to the direct expenses related to the production of goods sold by a business, including materials and labor.

Beginning Inventory

The value of all inventory held by a company at the start of an accounting period.

Net Income

The conclusive financial gain of a company post all deductions for expenses and taxes from the revenue.