Merrell Enterprises' Stock Has an Expected Return of 14

question 22

Multiple Choice

Merrell Enterprises' stock has an expected return of 14%. The stock's dividend is expected to grow at a constant rate of 8%, and it currently sells for $50 a share. Which of the following statements is CORRECT?

• A) the stock's dividend yield is 8%.
• B) the current dividend per share is $4.00.
• C) the stock price is expected to be $54 a share one year from now.
• D) the stock price is expected to be $57 a share one year from now.
• E) the stock's dividend yield is 7%.

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Definitions:

Schedule D

Utilized by taxpayers to report sales or exchanges of capital assets, encapsulating both gains and losses.

Form 4797

A tax form used to report the sale or exchange of business property, encompassing both gains and losses.

Investment Purposes

The intent to allocate resources or capital towards assets anticipated to generate income or profit.

Inheritance

Assets received from someone who has passed away, often subject to specific laws and taxes.