A Stock Is Expected to Pay $3

question 53

Multiple Choice

A stock is expected to pay $3.20 per share every year indefinitely and the equity cost of capital for the company is 10%.What price would an investor be expected to pay per share next year?

• A)$8.00
• B)$16.00
• C)$24.00
• D)$32.00

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Definitions:

Contract

An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law.

Assignment

The transfer of rights or property from one party to another, often seen in contracts or similar agreements.

Assignable

Refers to rights or property that can be transferred or made over to another party by the owner.

Antiassignment Clauses

Provisions within contracts that restrict or prohibit the transfer of contract rights to another party.