If the Dividend Yield for Year 1 Is Expected to Be

question 107

Multiple Choice

If the dividend yield for year 1 is expected to be 5% based on the current price of $25,what will the year 4 dividend be if dividends grow at a constant 6%?

• A) $1.33
• B) $1.49
• C) $1.58
• D) $1.67

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Definitions:

MACRS Tables

The Modified Accelerated Cost Recovery System tables used in the United States for tax purposes to determine the depreciation of assets over time.

Allowable Depreciation

The allowable tax deduction for the reduction in value of a tangible asset over its useful life, as determined by tax regulations.

MACRS Tables

Depreciation schedules in the Modified Accelerated Cost Recovery System allowing for faster asset depreciation in the earlier years of the asset's life.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.