Universal Forest's Current Stock Price Is $154

question 34

Multiple Choice

Universal Forest's current stock price is $154.00 and it is likely to pay a $5.23 dividend next year. Since analysts estimate Universal Forest will have a 13.0% growth rate, what is its required return?

• A) 16.40%
• B) 15.28%
• C) 13.62%
• D) 14.71%

---

Definitions:

Market Equilibrium

The state in a market where the quantity demanded of a good matches the quantity supplied, leading to a stable price for the good.

Corrective Subsidy

A financial incentive provided by the government designed to encourage activities that yield external benefits or to correct a market failure by reducing private costs.

Social Optimum

The most efficient allocation of resources, resulting in the maximization of social welfare and benefiting all members of a society.

Corrective Tax

Levies imposed to address and ameliorate the negative externalities generated by certain economic activities, thereby realigning social and private costs.