If a Stock's Dividend Is Expected to Grow at a Constant

question 192

Multiple Choice

If a stock's dividend is expected to grow at a constant rate of 8 per cent in the future and it has just paid a dividend of $1.25 a share,and you have an alternative investment of equal risk that will earn a 12 per cent rate of return,what would you be willing to pay per share for this stock?

• A) $31.25
• B) $1.40
• C) $1.25
• D) $1.12

Understand the differences between various business entities and their implications for accounting.

Grasp the objectives and importance of financial accounting for external analysis and decision-making.

Comprehend the purpose and function of the International Accounting Standards Board (IASB).

Acknowledge the significance of generally accepted accounting principles (GAAP) in preparing and interpreting financial statements.

---

Definitions:

Bundle Pricing

A pricing strategy where multiple products or services are combined and sold at a single price, often lower than the total if bought individually.

Full-Color Illustrated Pamphlets

These are marketing or informational materials designed with vivid, multi-colored illustrations to attract attention and convey messages effectively.

Rollout Program

The strategic release or launch of a new product, service, or policy across different regions or markets.

Contingency Plan

is a strategy or procedure prepared in advance to manage and mitigate the impact of possible future events, emergencies, or risks.