A Company Has a Current Share Price of $14

question 28

Multiple Choice

A company has a current share price of $14.50 and is expected to pay a $0.85 dividend in one year. If the company's equity cost of capital is 12%, what price would its shares be expected to sell for immediately after it pays the dividend?

• A)$13.65
• B)$15.29
• C)$15.39
• D)$12.18

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Definitions:

Endocrine System

A network of glands and organs that releases hormones directly into the bloodstream to regulate bodily functions.

Pituitary Gland

The endocrine system’s most influential gland. Under the influence of the hypothalamus, the pituitary regulates growth and controls other endocrine glands.

Thyroid Gland

An endocrine gland in the neck that produces hormones regulating metabolism and energy levels, among other functions.

Neural Networks

Systems of interconnected neurons that process information in both the human brain and in artificial constructs, simulating the way biological nervous systems work.