Use the Information for the Question(s)below

question 74

Multiple Choice

Use the information for the question(s) below.
Defenestration Industries plans to pay a $4.00 dividend this year and you expect that the firm's earnings are on track to grow at 5% per year for the foreseeable future.Defenestration's equity cost of capital is 13%.
-Assuming that Defenestration's dividend payout rate and expected growth rate remain constant,and Defenestration does not issue or repurchase shares,then Defenestration's stock price is closest to:

• A)$50.00.
• B)$32.30.
• C)$22.25.
• D)$30.75.

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Definitions:

Compete

The act of entities striving against each other to attain a goal, such as a higher market share or win.

Cooperate

The act of working together towards a common goal or benefit.

Nonprice Competition

Strategies companies use to differentiate their product from competing products based on factors not related to price, such as quality or service.

Interdependence

A situation where two or more entities rely on each other.