Southern Foods Just Paid an Annual Dividend of $1

question 102

Multiple Choice

Southern Foods just paid an annual dividend of $1.10 a share.Management estimates the dividend will increase by 10 percent a year for the next four years.After that,the annual dividend growth rate is estimated at 3.2 percent.The required rate of return is 12 percent.What is the value of this stock today?

• A) $12.55
• B) $13.00
• C) $14.54
• D) $15.81
• E) $16.21

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Definitions:

World System

A viewpoint that emphasizes the global interconnections and dependencies of economies and cultures.

Peripheral Countries

Countries often characterized by their marginal position within the global economic system, typically having less developed economies and depending on core countries for capital.

Raw Materials

The basic material from which a product is made, typically referring to natural resources that are used in production.

GDP

Gross Domestic Product, a monetary measure of the market value of all final goods and services produced in a period by a country.