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:

Economic Stabilization

Economic stabilization refers to government or central bank policies aimed at smoothing out economic fluctuations, controlling inflation, and reducing unemployment.

Main Arguments

The primary or central claims, reasons, or justifications that are put forward in a discussion, debate, or argument.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising.

Consumption Spending

The expenditure by households on goods and services, excluding purchases of new housing, which is a key component in calculating a country's gross domestic product (GDP).