Diets for You Announced Today That It Will Begin Paying

question 62

Multiple Choice

Diets For You announced today that it will begin paying annual dividends next year.The first dividend will be $0.12 a share.The following dividends will be $0.15,$0.20,$0.50,and $0.75 a share annually for the following 4 years,respectively.After that,dividends are projected to increase by 4 percent per year.How much are you willing to pay to buy one share of this stock today if your desired rate of return is 8.5 percent?

• A)$11.67
• B)$11.94
• C)$12.78
• D)$13.50
• E)$13.86

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Definitions:

Aggregation

The process of combining multiple pieces of data or information to create a summary or composite view.

Safety Inventory

Additional stock kept beyond expected demand to protect against variability in market demand or supply chain disruptions.

Normally Distributed

Refers to a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Standard Deviation

A statistical metric that quantifies the dispersion or spread of a dataset relative to its mean, indicating consistency or variability.