Newcomer Mills Is a Relatively New Firm Which Will Retain

question 47

Multiple Choice

Newcomer Mills is a relatively new firm which will retain all of its earnings for the next three years. Four years from now, the firm expects to pay its first dividend of $0.15 a share. After that, it intends to increase the dividend by 5 percent annually. What is the value of this stock today at a discount rate of 10 percent?

• A) $1.53
• B) $1.78
• C) $2.04
• D) $2.25
• E) $2.60

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Definitions:

Disappointment

The feeling of sadness or displeasure caused by the non-fulfillment of one's hopes or expectations.

Bad-News Message

A communication that conveys disappointing, unfavorable, or negative information to the receiver.

Goodwill

An intangible asset that represents the value of a business's reputation, brand, and customer relationships.

Apologize

The act of expressing remorse or regret for one's actions or words, often aiming to mend or improve a relationship.