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:

Direct Conversion

The process of changing one form of energy, material, or resource directly into another without intermediate stages.

Variable Overhead

Costs associated with manufacturing that fluctuate with the level of output, such as raw material costs and energy expenses directly tied to production levels.

Overhead Absorption

A method of applying a portion of a company’s indirect costs, such as electricity or rent, to individual units of production.