Titanium World Inc

question 57

Multiple Choice

Titanium World Inc. ,which is a firm that makes specialized golf clubs,plans to pay a dividend of $2 per share at the end of this year;the following year's dividend is expected to be $3 per share;the dividend the year after is expected to be $5;and,after that point,dividends should increase at a constant rate of 10 percent each year forever.The appropriate discount rate for Titanium World is 15 percent.What is the per share value of Titanium World's stock?

• A) $70.19
• B) $110.00
• C) $62.89
• D) $79.62
• E) $80.72

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Definitions:

Estoppel

A rule whereby a person may not deny the truth of a statement of fact made by him or her when another person has relied and acted upon the statement.

Consideration

The benefit or value that must be exchanged between parties to form a valid contract.

Common Law

A legal system based on precedent and court decisions rather than written laws or statutes.

Statute Law

Law enacted by a legislative body, such as a parliament or congress, officially documented and codified.