DK Corporation Currently Does Not Pay a Dividend but Plans

question 63

Multiple Choice

DK Corporation currently does not pay a dividend but plans to makes its first dividend payment of $2 in 3 years,DK then plans to pay 40% of its ROE in dividends once they commence.If the appropriate is discount rate is 20% and DK expects and ROE of 22%,what is the current stock price today?

• A) $ 19.27
• B) $ 20.42
• C) $ 33.29
• D) $ 35.29

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Definitions:

Dating Cohabitation

A living arrangement in which a couple who spends a great deal of time together eventually decides to move in together.

Census Bureau

A national agency responsible for collecting, analyzing, and publishing statistical data about the population, economy, and society of a country, typically on a regular basis.

Substitute Marriage Cohabitation

A living arrangement where couples live together as if married without legally formalizing the union.

Common-law Marriage

A marriage recognized in some jurisdictions, where a couple lives together for a period and presents themselves as married without having a formal ceremony or license.