A Firm Is Expected to Pay a Dividend of $2

question 39

Multiple Choice

A firm is expected to pay a dividend of $2.00 next year and $3.75 the following year. Financial analysts believe the stock will be at their price target of $125.00 in two years. Compute the value of this stock with a required rate of return of 15 percent.

• A) $78.34
• B) $81.05
• C) $87.13
• D) $99.09

Understand the calculation and significance of production needs in budgeting.

Recognize the role of sales forecasting in budget preparation.

Interpret and analyze budgeted financial statements.

Grasp the significance of accounts receivable and payable in cash budgeting.

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Definitions:

Self-Efficacy Theory

A psychological theory that suggests individuals' belief in their ability to succeed affects their motivation and performance in tasks.

Social Learning Theory

A theory that proposes individuals learn behaviors, skills, and attitudes through observation of others rather than through direct experience alone.

Reinforcement Theory

A behaviorist theory suggesting that behavior is shaped by its consequences, with reinforcement used to increase desired behaviors.

Need Satisfaction

the fulfillment of basic or complex desires or requirements essential for mental and physical well-being.