Static Utility Company Anticipates Its Revenues,and Consequently Its Common Stock

question 107

Multiple Choice

Static Utility Company anticipates its revenues,and consequently its common stock dividends,will remain flat forever.It currently pays an annual dividend of $20 per year.If it pays the next dividend exactly one year from today,then what is the price of Static's common shares if the required rate of return is 12%?

• A) $24.00
• B) $40.00
• C) $166.67
• D) $200.00

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Definitions:

Dimmer Switch

A control device used to adjust the brightness of lights by regulating the voltage or current flowing to them.

Relays

Electrically operated switches that allow a low-power electrical circuit to control one or more higher power circuits, widely used in various types of electronic and electrical applications.

Clockwise

A circular motion that proceeds in the same direction as a clock's hands, from the top to the right, then down and back to the top.

Counterclockwise

A direction opposite to the way the hands move around a clock, often used to describe the rotation or movement of objects.