The Last Paid Dividend Is $2 for a Share of Common

question 26

Multiple Choice

The last paid dividend is $2 for a share of common stock that is currently selling for $20. What is the cost of common equity if the long-term growth rate in dividends for the firm is expected to be 8%?

• A) 10.8%
• B) 12.8%
• C) 14.8%
• D) 16.8%
• E) 18.8%

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Definitions:

Componential

In the context of intelligence theories, componential refers to the analytical aspect of intelligence which encompasses the ability to analyze, evaluate, and compare information.

Experiential

Relating to or derived from experience; emphasizing the importance of personal experience in the acquisition of knowledge.

Contextual

Pertaining to or depending on the context of a situation, event, or concept, affecting its understanding and interpretation.

Intelligence

The ability to acquire, understand, and apply knowledge and skills, and to adapt to new situations.