Will CoIs Expected to Pay a Dividend of $2 Per Share

question 43

Multiple Choice

Will Co.is expected to pay a dividend of $2 per share at the end of year 1(D₁) ,and the dividends are expected to grow at a constant rate of 4% forever.If the current price of the stock is $20 per share,calculate the expected return or the cost of equity capital for the firm.

• A)10%
• B)4%
• C)14%
• D)20%

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Definitions:

Sickle-cell Anemia

A genetic blood disorder characterized by red blood cells that assume an abnormal, rigid, sickle shape, leading to various health complications.

African-Americans

A term referring to citizens or residents of the United States who have origins in any of the black populations of Africa.

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The genetic makeup of an organism, comprising all of its genes and contributing to its phenotype, or observable characteristics.

Phenotype

The set of observable characteristics or traits of an organism, resulting from the interaction of its genotype with the environment.