AmazonCom Inc

question 7

Multiple Choice

Amazon.com Inc.does not currently pay a dividend.Analysts expect Amazon to commence paying annual dividends in three years.The first dividend is expected to be $2 per share.Dividends are expected to grow from that point at an annual rate of 4% in perpetuity.Investors expect a 12% return from the stock.What should the price of the stock be today?

• A) $19.93
• B) $21.37
• C) $22.03
• D) $22.32
• E) $25.00

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Definitions:

Reported Income

Reported income is the total earnings a company reports on its income statement, computed as the net income after taxes, interest, depreciation, and other expenses.

Recognition of Revenue

The process of recording revenue in the financial statements when it is earned and measurable, according to set criteria.

Financial Reporting

Creating reports that unveil the financial standing of a company to its executives, shareholders, and regulatory authorities.

Tax Law

The body of law governing taxation, including regulations on income, corporate, sales, and property taxes, as administered by governmental entities.