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

Acknowledge the current trends and developments in Operations Management.

Understand the role and application of Operations Management in service industries.

Appreciate the impact of industrial engineering, management science, and information technology on Operations Management.

Understand the fundamental concepts of internal and sustainable growth rates.

---

Definitions:

Net Income

The total profit of a company after all expenses, including taxes, have been deducted from revenue.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing its interest expenses to its earnings before interest and taxes.

Interest Expense

The cost incurred by an entity for borrowed funds.

Debt/Equity Ratio

A financial metric showing the balance between the amount of equity provided by shareholders and the debt incurred to support a company's assets.