A Firm Is Expected to Pay a Dividend of $2

question 39

Multiple Choice

A firm is expected to pay a dividend of $2.00 next year and $3.75 the following year. Financial analysts believe the stock will be at their price target of $125.00 in two years. Compute the value of this stock with a required rate of return of 15 percent.

• A) $78.34
• B) $81.05
• C) $87.13
• D) $99.09

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Definitions:

Carotid Artery

A major blood vessel in the neck that supplies blood to the brain, neck, and face.

Radial Artery

A major artery in the forearm that supplies blood to the hand and arm, palpable at the wrist.

Bradycardia

A slower than normal heart rate, typically defined as fewer than 60 beats per minute in adults.

Tachycardia

A condition characterized by an abnormally fast heart rate, often defined as exceeding 100 beats per minute in adults.