ABC Common Stock Is Expected to Have Extraordinary Growth of 20

question 20

Multiple Choice

ABC common stock is expected to have extraordinary growth of 20% per year for 2 years,at which time the growth rate will settle into a constant 6%.If the discount rate is 15% and the most recent dividend was $2.50,what should be the approximate current share price?

• A) $31.16
• B) $33.23
• C) $37.42
• D) $47.77

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Definitions:

Streptococci

A genus of round-shaped bacteria, some strains of which can cause diseases in humans such as strep throat, rheumatic fever, and other infections.

Rheumatic Fever

An inflammatory disease that can develop as a complication of untreated or improperly treated strep throat or scarlet fever.

Grape-Like Clusters

A descriptive term often used in microbiology to describe the appearance of certain bacteria, such as Staphylococcus, when viewed under a microscope.

Staphylococci

A group of bacteria commonly found on the skin and in the nose, which can cause a range of infections, from minor to life-threatening.