Nico Custom Cycles' Common Stock Currently Pays No Dividends

question 115

Multiple Choice

Nico Custom Cycles' common stock currently pays no dividends. The company plans to begin paying dividends beginning 3 years from today. The first dividend will be $3.00 and dividends will grow at 5 percent per year thereafter. Given a required return of 15 percent, what would you pay for the stock today?

• A) $25.33
• B) $18.73
• C) $29.86
• D) $20.72

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Definitions:

Tests For Reliability

Methods used to assess the consistency and dependability of a measure or test over time or across different conditions.

Experimental Design

A research methodology involving the manipulation of one variable to determine its effect on another variable, within a controlled environment.

Split-Half Technique

A way to determine inter-item reliability by correlating half the questions in a question set with the other half of the questions.

Tested

Evaluated or examined the performance, quality, or reliability of something through trial or experiment.