A Firm Plans on Paying a Constant Dividend of $2

question 36

Multiple Choice

A firm plans on paying a constant dividend of $2 per share into the foreseeable future.If investors seek a 12% return to hold the firm's stock,what is fair value for the company's stock?

• A) $13.67
• B) $15.67
• C) $16.67
• D) $18.67

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Definitions:

Notation or Memorandum

Notation or Memorandum refers to a brief written record or note made for the purpose of aiding memory or providing formal documentation of an event, decision, or agreement.

Bilateral Contract

A legal agreement where each party promises to perform an act in exchange for the other party's act.

Express Contract

A contract in which both parties accept mutual obligations through either oral discussion or written communication.