What Is the Value of the Expected Dividend Per Share

question 71

Multiple Choice

What is the value of the expected dividend per share for a stock that has a required return of 16%,a price of $45,and a constant-growth rate of 12%?

• A) $1.80
• B) $3.60
• C) $4.50
• D) $7.20

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Definitions:

Merger Incremental Cash Flow Analysis

The process of evaluating the additional cash flows a company expects to receive from a merger or acquisition.

Vertical Merger

Occurs when a company acquires another firm that is “upstream” or “downstream”; for example, an automobile manufacturer acquires a steel producer.

Petrochemical Firm

A company involved in the production of chemical products derived from petroleum and natural gas.

Oil Reserves

Quantified estimates of the amount of crude oil located in a specific economic region that can be recovered and sold under current economic and technological conditions.