The Last Dividend (Div₀) Is $1

question 16

Multiple Choice

The last dividend (Div₀) is $1.80, the growth rate (g) is 6%, and the required rate of return (r) is 12%. What is the stock price according to the constant growth dividend model?

• A) $31.80
• B) $30.80
• C) $30.00
• D) $15.00

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Definitions:

Consumption

The use of goods and services by households.

Northeasterly

In or relating to the direction that is between north and east; often used to describe wind or weather patterns.

Indifference Curves

Graphical representations in economics that show combinations of two goods among which a consumer is indifferent, meaning they have no preference for one combination over another.

Total Utility

The total satisfaction or benefit that a consumer receives from consuming a particular quantity of goods or services.