The WTC Corporation Will Pay a Constant Dividend of $3

question 8

Multiple Choice

The WTC Corporation will pay a constant dividend of $3.20 per share,per year,in perpetuity.If all investors pay a 15% tax on dividends,there is no capital gains tax,and the cost of capital for investing in WTC stock is 9%,what is the price for a share of WTC stock?

• A)$30.22
• B)$26.67
• C)$18.77
• D)$16.45
• E)$15.76

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Definitions:

Code of Ethics

A set of principles and guidelines designed to help professionals conduct business honestly and with integrity.

Davis-Bacon Act

A United States federal law that requires paying the local prevailing wages on public works projects for laborers and mechanics.

Goldwater-Nichols Act

A significant restructuring of the United States military's chain of command, passed in 1986 to improve military effectiveness and interoperability.

Ethical Decision Making

The process of evaluating and choosing among alternatives in a manner consistent with ethical principles.