Bavarian Sausage Is Expected to Pay a $1

question 51

Multiple Choice

Bavarian Sausage is expected to pay a $1.57 dividend next year and investors expect that dividend to grow by 5% each year forever.If the required return on the stock investment is 14%,what should be the price of the stock in 5 years?

• A) $18.32
• B) $22.28
• C) $21.22
• D) $17.44

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Definitions:

Last Mile Delivery

The final step in the delivery process from a distribution center or facility to the end customer, often the most expensive and time-consuming part.

Package Carrier

A company or service that specializes in the delivery of parcels and documents from one location to another.

Drop-Shipping

A product fulfillment strategy in retail where the store doesn't maintain an inventory of the items it sells. Rather, upon selling a product, the store orders it from a third party and arranges for it to be delivered straight to the buyer.

Manufacturer Storage

A logistics strategy where the manufacturer holds stock, typically in a warehouse, until it is ordered by retailers or customers.