Savickas Petroleum's Stock Has a Required Return of 12%,and the Stock

question 56

Multiple Choice

Savickas Petroleum's stock has a required return of 12%,and the stock sells for $40 per share.The firm just paid a dividend of $1.00,and the dividend is expected to grow by 30% per year for the next 4 years,so D₄ = $1.00(1.30) ⁴ = $2.8561.After t = 4,the dividend is expected to grow at a constant rate of X% per year forever.What is the stock's expected constant growth rate after t = 4,i.e.,what is X?

• A)5.17%
• B)5.44%
• C)5.72%
• D)6.02%
• E)6.34%

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Definitions:

Regulatory Sequence

is a segment of DNA where regulatory proteins bind to control gene expression by turning genes on or off.

Repressor

A protein that binds to specific DNA sequences to prevent the transcription of genetic information from DNA to messenger RNA.

Metastasis

Spread of cancer from the place of origin throughout the body; caused by the ability of cancer cells to migrate and invade tissues.

Malignant Tumors

Cancerous growths characterized by uncontrolled cell division with the ability to invade surrounding tissues and spread to other parts of the body.