NU YU Announced Today That It Will Begin Paying Annual

question 5

Multiple Choice

NU YU announced today that it will begin paying annual dividends. The first dividend will be paid next year in the amount of $.25 a share. The following dividends will be $.40,$.60,and $.75 a share annually for the following three years,respectively. After that,dividends are projected to increase by 3.5% per year. How much are you willing to pay to buy one share of this stock if your desired rate of return is 12%?

• A) $1.45
• B) $5.80
• C) $7.25
• D) $9.06
• E) $10.58

---

Definitions:

Productivity

The efficiency at which individuals, companies, or economies produce goods and services, usually measured as output per unit of input.

Economic Growth

An increase in the amount of goods and services produced in an economy over a period of time.

Investment

Investment refers to the allocation of resources, usually financial, in order to generate income or profit, including the purchase of assets with the expectation that it will generate payoff in the future.

Advanced Economy

A term used to describe a country with a very high level of economic development, characterized by high-income levels, diversified economic structures, and stable financial markets.