Use the Information for the Question(s)below

question 50

Multiple Choice

Use the information for the question(s) below.
The JRN Corporation will pay a constant dividend of $3 per share,per year,in perpetuity.Assume that all investors pay a 20% tax on dividends and that there is no capital gains tax.The cost of capital for investing in JRN stock is 12%.
-Assume that management makes a surprise announcement that JRN will no longer pay dividends but will use the cash to repurchase stock instead.The price of a share of JRN's stock is now closest to:

• A)$20.00.
• B)$25.00.
• C)$18.00.
• D)$24.00.

---

Definitions:

Sampling Theory

A field of study concerned with the selection of individual observations intended to yield some knowledge about a population, especially for the purposes of statistical inference.

Participant Selection

The process of choosing individuals to take part in a research study based on certain criteria.

Foundation

The base or underlying support for a theory, argument, or physical structure.

Statistical Power

The likelihood that a study will detect an effect when there is an effect to be detected, reducing the risk of a Type II error.