A Stock Is Expected to Pay $1

question 37

Multiple Choice

A stock is expected to pay $1.25 per share every year indefinitely and the equity cost of capital for the company is 7.5%.What price would an investor be expected to pay per share ten years in the future?

• A)$16.67
• B)$25.01
• C)$33.34
• D)$41.68

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Definitions:

Trade Deficit

A situation in which a country's imports of goods and services exceed its exports, resulting in a negative balance of trade.

Exports

Goods, services, or technology sent out of a country to be sold in another.

Imports

Goods and services purchased from foreign producers, brought into a country.

Trade Deficit

A situation where a country imports more goods and services than it exports, resulting in a negative balance of trade.