Consider a Firm That Had Been Priced Using a 12

question 109

Multiple Choice

Consider a firm that had been priced using a 12 percent growth rate and a 16 percent required return. The firm recently paid a $5.00 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 12.5 percent rate. How much should the stock price change (in dollars and percentage) ?

• A) $21.50; 13.72%
• B) $21.50; 16.14%
• C) $20.71; 14.79%
• D) $20.71; 19.93%

---

Definitions:

Independent Clauses

Sentences or parts of sentences that can stand alone as complete thoughts because they contain both a subject and a verb.

Punctuation

The system of symbols, including commas, periods, question marks, and exclamation points, used in writing to separate sentences and clarify meaning.

Conjunction

A word used to connect clauses or sentences or to coordinate words in the same clause.

Active-voice Sentences

Sentences in which the subject performs the action expressed by the verb, making the writing clearer and more direct.