Predictable Corp Has Increased Its Annual Dividend Each Year of Its

question 73

Multiple Choice

Predictable Corp has increased its annual dividend each year of its life by 2% (and will continue to do so indefinitely) .If Predictable paid its annual dividend yesterday of $8 and the cost of capital is currently 4%,then by what amount will the stock price decrease by if the cost of capital increases to 5%?

• A) $408.00
• B) $272.00
• C) $136.00
• D) none of the above

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Definitions:

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