The Felix Corp

question 68

Multiple Choice

The Felix Corp. projects to pay a dividend of $.75 next year and then have it grow at 12% for the following 3 years before growing at 8% indefinitely thereafter. The equity has a required return of 10% in the market. The price of the stock should be _______.

• A) $9.38
• B) $17.05
• C) $41.67
• D) $59.80
• E) $62.38

---

Definitions:

Outsourcing

The practice of hiring external firms or individuals to perform tasks, handle operations or provide services for an organization.

Specific Skills

Abilities or expertise that are particularly suited to specific tasks or industries, often requiring specialized training or experience.

Cost Neutrality

A financial strategy or condition where new expenditures are offset by savings or additional revenue in other areas, resulting in no net impact on the budget.

Compensation and Benefits

The package of salary, wage, and other perks provided to employees in exchange for their work and expertise.