Static Utility Company Anticipates Its Revenues,and Consequently Its Common Stock

question 82

Multiple Choice

Static Utility Company anticipates its revenues,and consequently its common stock dividends,will remain flat forever.It currently pays an annual dividend of $20 per year.If it pays the next dividend exactly one year from today,then what is the price of Static's common shares if the required rate of return is 12%?

• A) $24.00
• B) $40.00
• C) $166.67
• D) $200.00

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Definitions:

Specific Invoice

An itemized bill showing quantities, descriptions, prices, and terms of products and services provided by a seller to a buyer.

Ending Inventory

The total value of all unsold goods remaining at the end of an accounting period.

Recent Invoices

The latest billing statements or documents issued by a seller to a buyer, relating to a sale transaction and indicating the products, quantities, and agreed prices.

Full Disclosure Principle

The accounting principle that requires companies to fully disclose on their financial reports changes in accounting procedures and methods along with effects of the change as well as justification for change.