USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 35

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider a firm that has just paid a dividend of $1.5. An analyst expects dividends to grow at a rate of 9 percent per year for the next three years. After that dividends are expected to grow at a normal rate of 5 percent per year. Assume that the appropriate discount rate is 7 percent.
-Refer to Exhibit 8.4. The present value today of dividends for years 1 to 3 is

• A) $4.67.
• B) $3.08.
• C) $5.67.
• D) $4.5.
• E) $1.53.

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Definitions:

Fourth Branch

Informal term for groups or entities, like the media or regulatory agencies, that influence but do not belong to the official branches of government.

Administrative Law Judges

Officials who preside over hearings involving federal regulatory agencies, making decisions on disputes between those agencies and individuals or entities.

Good Cause

A legally sufficient reason or set of circumstances that justifies an action under the law.

Enabling Statute

Legislation that gives the necessary authority and guidelines for the creation and operation of an agency or body.