A Firm Does Not Pay a Dividend

question 35

Multiple Choice

A firm does not pay a dividend. It is expected to pay its first dividend of $0.15 per share in three years. This dividend will grow at 9 percent indefinitely. Using a 10 percent discount rate, compute the value of this stock.

• A) $12.28
• B) $12.40
• C) $16.35
• D) $16.50

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Definitions:

Theoretical Approaches

Refers to the various frameworks or methodologies used to analyze and interpret social phenomena.

Auguste Comte

A French philosopher known as the father of sociology, who advocated for the scientific study of society and the development of positivism.

French Revolution

A period of radical social and political upheaval in France that started in 1789 and led to the end of monarchy, the rise of Napoleon, and the reformation of the country's social structure.

Social Laws

Rules and regulations established by a society that govern the behavior of its members and are enforced by legal institutions.