What Should Be the Current Price of a Stock If

question 65

Multiple Choice

What should be the current price of a stock if the expected dividend is $5,the stock has a required return of 20%,and a constant dividend growth rate of 6%?

• A) $19.23
• B) $25.00
• C) $35.71
• D) $37.86

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Definitions:

Family Firms

Businesses owned and operated by multiple generations of a family, with decision-making influenced by familial relationships.

Second Generation

Typically refers to individuals born in a country to parents who immigrated, often experiencing a blend of cultural influences from their heritage and their country of birth.

Third Generation

In technology, often refers to the third iteration or version of a product or system, showing advancement and improvements over previous generations.

Business Success

The achievement of desired financial and non-financial objectives in a business venture, often measured by growth, profit, and market share.