Dividend Initiation and Stock Value a Firm Does Not Pay

question 117

Multiple Choice

Dividend Initiation and Stock Value A firm does not pay a dividend.It is expected to pay its first dividend of $0.10 per share in two years.This dividend will grow at 11 percent indefinitely.Using a 13 percent discount rate,compute the value of this stock.

• A)$4.42
• B)$4.59
• C)$5.43
• D)$7.21

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Definitions:

Fugitive Slave

A term used historically to describe enslaved people who escaped from bondage in an effort to gain freedom, often facing harsh laws if caught.

Escaping

The act of breaking free from restraint or confinement, often used in contexts such as escaping from slavery or prison.

Underground Railroad

A network of secret routes and safe houses established in the United States during the early to mid-19th century, used by African-American slaves to escape into free states and Canada with the aid of abolitionists.

Paternalism

The policy or practice on the part of people in positions of authority of restricting the freedom and responsibilities of those subordinate to or dependent upon them, supposedly for the latter’s own good.