Credenza Industries Is Expected to Pay a Dividend of $1

question 24

Multiple Choice

Credenza Industries is expected to pay a dividend of $1.70 at the end of the coming year. It is expected to sell for $62 at the end of the year. If its equity cost of capital is 9%, what is the expected capital gain from the sale of this stock at the end of the coming year?

• A) $3.56
• B) $56.88
• C) $5.12
• D) $58.44

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Definitions:

Outsourcing

The business practice of hiring a party outside a company to perform services or create goods that traditionally were performed in-house.

Core Competency

A set of knowledges and skills that make the organization superior to competitors and create value for customers.

Strategic Planning

The process of defining a business's strategy or direction and making decisions on allocating resources to pursue this strategy.

Propensity Analysis

The use of statistical techniques to predict the likelihood of a specific event or behavior occurring.