Use the Information for the Question(s)below

question 1

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%.
-The price of a share of JRN's stock is closest to:

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

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Definitions:

Multiply

The process of combining two numbers or quantities to get their product.

Simplify

Reducing a mathematical expression or equation to its most basic form without changing its value.

Special Product Pattern

Formulas that simplify the multiplication of algebraic expressions.

Multiply

The arithmetic operation of scaling one number by another, equivalent to adding a number to itself multiple times.