Assume IBM Just Paid a Dividend of $4

question 38

Multiple Choice

Assume IBM just paid a dividend of $4.50 and expects these dividends to grow at 8% a year. The price of IBM is $100 per share. What is IBM's cost of equity capital?

• A) 3.86%
• B) 8%
• C) 12.22%
• D) 12.86%

---

Definitions:

Boxer Rebellion

An uprising in China between 1899 and 1901, aimed at ending foreign influence in the country, led by the "Boxers," a group who practiced martial arts and held anti-Christian and anti-imperialist beliefs.

Russo-Japanese War

The Russo-Japanese War (1904-1905) was a conflict between Russia and Japan, primarily over imperial ambitions in Manchuria and Korea, which resulted in a surprising victory for Japan, marking the first time an Asian power defeated a European power in modern warfare.

Conservative Republicans

A faction within the Republican Party in the United States that advocates for traditional values, limited government, and free market principles.

Theodore Roosevelt

The 26th President of the United States, known for his progressive policies, leadership of the Rough Riders, and contributions to the conservation movement.