How Much Are You Willing to Pay for One Share

question 8

Multiple Choice

How much are you willing to pay for one share of stock if the company just paid an annual dividend of $1.03,the dividends increase by 3 percent annually,and you require a rate of return of 15 percent?

• A)$8.58
• B)$9.49
• C)$10.40
• D)$8.84
• E)$6.87

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Definitions:

Job-Order Costing System

An accounting method used to accumulate and assign costs to custom or unique products or jobs.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to products or job orders, based on estimated costs and activity levels.

Manufacturing Departments

Specialized functional areas within a manufacturing facility where specific stages of production are carried out.

Machine-Hours

A measurement of production time using the number of hours machines are operated.