A Firm Is Expected to Pay a Dividend of $3

question 91

Multiple Choice

A firm is expected to pay a dividend of $3.00 next year and $3.21 the following year. Financial analysts believe the stock will be at their target price of $80.00 in two years. Compute the value of this stock with a required return of 13 percent.

• A) $50.00
• B) $67.52
• C) $67.82
• D) $86.21

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Definitions:

Short-Term Bonuses

financial incentives provided to employees on a non-annual basis to encourage performance or reward achievements.

Top Performers

Employees who consistently exceed performance expectations and contribute significantly to the organization's success.

Earnings At Risk

Potential future losses in wages or salary due to various risk factors, including economic downturns, organizational changes, or personal performance issues.

Incentive Pay

Additional compensation awarded to employees for achieving specific goals, exceeding performance targets, or exceptional work.