NU YU Announced Today That It Will Begin Paying Annual

question 73

Multiple Choice

NU YU announced today that it will begin paying annual dividends.The first dividend will be paid next year in the amount of €.25 a share.The following dividends will be €.40,€.60,and €.75 a share annually for the following three years,respectively.After that,dividends are projected to increase by 3.5% per year.How much are you willing to pay to buy one share of this equity if your desired rate of return is 12%?

• A)€1.45
• B)€5.80
• C)€7.25
• D)€9.06
• E)€10.58

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Definitions:

Net Operating Income

The income earned from a company's activities once operational costs have been deducted from revenues generated from operations.

Price Reduction

A decrease in the selling price of goods or services, often to increase demand or sales volume.

High Pressure Pump

A type of pump designed to move fluids under high pressure, commonly used in hydraulic systems, water supply, and oil and gas applications.

Useful Life

The estimated period that an asset is expected to be functional and contribute to a company's operations.