A Stock Is Expected to Pay $0

question 20

Multiple Choice

A stock is expected to pay $0.80 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 6.4%,what price would an investor be expected to pay per share five years into the future?

• A)$12.50
• B)$20.43
• C)$21.23
• D)$22.65