Monte Corporation Just Paid a Dividend of $4

question 49

Multiple Choice

Monte Corporation just paid a dividend of $4.25 and has an expected growth rate of 15% for the foreseeable future,if the discount rate is 18% what is the appropriate stock price today?

• A) $141.67
• B) $162.92
• C) $162.74
• D) $146.07

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Definitions:

WACC

In calculating a firm’s capital costs, the Weighted Average Cost of Capital method considers the proportionate weights of different capital categories.

WACC

Weighted Average Cost of Capital; the average rate of return a company is expected to pay its shareholders for using their capital.

NPV

Net Present Value, a calculation that compares the value of all cash inflows and outflows of a project or investment using a discount rate.

Cash Inflows

The movement of money into a business or project, typically from operations, financing, or investing activities.