A Fast Growing Firm Recently Paid a Dividend of $0

question 113

Multiple Choice

A fast growing firm recently paid a dividend of $0.80 per share. The dividend is expected to increase at a rate of 30% rate for the next 4 years. Afterwards, a more stable 7% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?

• A) $60.48
• B) $60.18
• C) $61.34
• D) $73.86

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Definitions:

Business Messages

Communication conveyed through various formats, such as emails, memos, and reports, within a professional setting.

Effective

Achieving a desired goal or result in an efficient and impactful manner.

Communication Goals

Objectives that an individual or organization aims to achieve through the process of communication.

Successful Negotiations

The process where two or more parties reach a mutually beneficial agreement through dialogue and compromise.