A Stock Is Expected to Pay $0

question 7

Multiple Choice

A stock is expected to pay $0.70 per share every year indefinitely. If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 7.9%, what price would an investor be expected to pay per share five years into the future?

• A) $8.86
• B) $14.18
• C) $14.62
• D) $15.06

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Definitions:

Parasympathetic Neurons

Nerve cells that are part of the parasympathetic nervous system, which helps in conserving energy and slowing down the heart rate.

Node of Ranvier

Gaps in the myelin sheath of nerve fibers which facilitate the rapid conduction of nerve impulses.

Dendrites

Branched extensions of a neuron that receive signals from other neurons and convey them toward the cell body.

Axon

A long, slender projection of a nerve cell that conducts electrical impulses away from the neuron's cell body.