What Constant-Growth Rate in Dividends Is Expected for a Stock

question 29

Multiple Choice

What constant-growth rate in dividends is expected for a stock valued at $32.00 if next year's dividend is forecast at $2.00 and the appropriate discount rate is 13%?

• A) 5.00%
• B) 6.25%
• C) 6.75%
• D) 15.38%

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Definitions:

Joint Venture

A business arrangement where two or more parties agree to pool their resources for accomplishing a specific task or project.

After Tax Profit

The net income a company earns after all taxes have been deducted from total revenue.

Miscellaneous Liabilities

A balance sheet item for obligations that do not fit into the standard categories of liabilities, often including various minor or irregular commitments.

Proportionately Adjusted Balance Sheet

A balance sheet method that adjusts the assets, liabilities, and equity based on a company's percentage ownership in other entities.