ABC Corporation ABC Corporation Just Paid a Dividend of $1.50 a Share

question 74

Multiple Choice

ABC Corporation
ABC Corporation just paid a dividend of $1.50 a share. The dividend is expected to grow at 10% a year for the next 2 years, and the 5% per year thereafter. The required return to invest in ABC stock is 12.50%.
-Suppose you want to buy ABC and hold it for the next 4 years.What would the selling price be for ABC in 4 years,assuming that none of our assumptions change?

• A) $28.01
• B) $28.76
• C) $29.40
• D) $30.80

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Definitions:

Relativism

The doctrine that knowledge, truth, and morality exist in relation to culture, society, or historical context, and are not absolute.

Philosophical Position

A fundamental viewpoint or stance on philosophical issues, reflecting deep theoretical beliefs.

World Oil Reserves

The estimated quantities of crude oil in the ground that are recoverable under current economic and technological conditions.

Critical Thinking

An approach to reasoning that requires the thinker to be aware of their own biases and assumptions in order to evaluate arguments and evidence objectively.