Nu-Tek,Inc

question 6

Multiple Choice

Nu-Tek,Inc. is expecting a period of intense growth and has decided to retain more of its earnings to help finance that growth. As a result it is going to reduce its annual dividend by 10% a year for the next three years. After that,it will maintain a constant dividend of $.70 a share. Last month,the company paid $1.80 per share. What is the value of this stock if the required rate of return is 13%?

• A) $6.79
• B) $7.22
• C) $8.22
• D) $8.87
• E) $9.01

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Definitions:

Confounding Variable

An external variable that influences both the dependent and independent variables in an experiment, potentially skewing the results.

Independent Variable

In experimental research, the variable that is manipulated or changed to observe its effects on the dependent variable.

Dependent Variable

The outcome the researcher is interested in measuring.

Confounding Variable

An outside influence that changes the effect of a dependent and independent variable being examined in an experimental study, potentially skewing results.