Combined Communications Is a New Firm in a Rapidly Growing

question 39

Multiple Choice

Combined Communications is a new firm in a rapidly growing industry.The company is planning on increasing its annual dividend by 15 percent a year for the next 4 years and then decreasing the growth rate to 3.5 percent per year.The company just paid its annual dividend in the amount of $0.20 per share.What is the current value of one share of this stock if the required rate of return is 15.5 percent?

• A)$1.82
• B)$2.04
• C)$2.49
• D)$2.71
• E)$3.05

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Definitions:

Statistical Control Chart

A tool used in manufacturing and business processes to plot data points over time and identify variances from the norm to detect and control predictable behaviors within a process.

Labour Efficiency Variance

A measure used in budgeting and accounting to analyze the difference between the actual hours worked and the standard hours expected for a task.

Critical Values

Specific points on a statistical distribution that are used to decide whether to reject the null hypothesis in hypothesis testing.

Materials Account

An account used to track the cost of raw materials that are bought and used during production processes.