Ajax Corporation Just Paid a Dividend of $5

question 52

Multiple Choice

Ajax Corporation just paid a dividend of $5.23 and has an expected growth rate of 5% for the foreseeable future,if the discount rate is 17% what is the appropriate stock price today?

• A) $49.20
• B) $51.34
• C) $50.48
• D) Cannot be determined with the available information

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Definitions:

Positively Sloped

Describes a graph or relationship where, as one variable increases, the other variable also increases, typical of a supply curve in economics.

Negatively Sloped

A graphical representation showing a decrease in one variable as another variable increases, often used in the context of demand curves.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net benefit to society from the production and consumption of goods and services.

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service versus what they actually receive, reflecting extra benefit.