Old Quartz Gold Mining Company Is Expected to Pay a Dividend

question 38

Multiple Choice

Old Quartz Gold Mining Company is expected to pay a dividend of $8 in the coming year.Dividends are expected to decline at the rate of 2% per year.The risk-free rate of return is 6% and the expected return on the market portfolio is 14%.The stock of Old Quartz Gold Mining Company has a beta of -0.25.The intrinsic value of the stock is ______.

• A)$80.00
• B)$133.33
• C)$200.00
• D)$400.00
• E)none of the above

---

Definitions:

IFRS

International Financial Reporting Standards; a set of accounting standards developed by the International Accounting Standards Board (IASB) for international use.

U.S. GAAP

The codification of how financial transactions and events are to be reported in the financial statements, developed and maintained by the Financial Accounting Standards Board (FASB) for the United States.

Straight-Line Method

A depreciation method where an equal amount of depreciation expense is allocated for each year of the asset's useful life.