Ottocell Motor Company Just Paid a Dividend of $1

question 51

Multiple Choice

Ottocell Motor Company just paid a dividend of $1.40.Analysts expect its dividend to grow at a rate of 10% next year,8% for the following two years,and then a constant rate of 5% thereafter.What is the expected dividend per share at the end of year 5?

• A)$2.08
• B)$1.98
• C)$1.80
• D)$0.99

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Definitions:

Monopolist's Profit

The excess earnings a monopolist achieves due to the lack of competition, allowing for pricing above marginal cost.

Maximize Profit

The process or strategy of adjusting the production and sales operations of a company to generate the highest possible return or profit.

Marginal Revenue

The incremental income obtained from the sale of one extra unit of a product or service.

Maximize Profit

The process of adjusting inputs and outputs in order to achieve the highest possible return on investment.