A Stock Is Expected to Pay $0

question 7

Multiple Choice

A stock is expected to pay $0.70 per share every year indefinitely. If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 7.9%, what price would an investor be expected to pay per share five years into the future?

• A) $8.86
• B) $14.18
• C) $14.62
• D) $15.06

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Definitions:

PCA Button

Stands for Patient-Controlled Analgesia, a system that allows patients to self-administer a controlled amount of pain medication through the press of a button.

Placebo

A placebo is an inactive substance or treatment used as a control in experiments, testing the effect of a drug or medical treatment by comparison.

Physiotherapist

A healthcare professional specialized in the treatment of individuals to restore, maintain, and maximize their strength, function, movement, and overall well-being.

Mobility

The ability to move freely and with ease in one's environment, enhancing the quality of life.