A Firm Is Expected to Pay a Dividend of $3

question 91

Multiple Choice

A firm is expected to pay a dividend of $3.00 next year and $3.21 the following year. Financial analysts believe the stock will be at their target price of $80.00 in two years. Compute the value of this stock with a required return of 13 percent.

• A) $50.00
• B) $67.52
• C) $67.82
• D) $86.21

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Definitions:

Consumer Product

Goods or services that are purchased by individuals for personal use.

Specialty Product

Products that are highly differentiated and unique, and for which consumers will make a special effort to seek out and purchase.

Brand Status

The perceived prestige and position of a brand in the minds of consumers, often associated with quality, luxury, or exclusivity.

Consumer Product

Goods or services that are purchased by individuals for personal or household use, as opposed to products bought for business purposes.