A Firm Has a Current Price of $40 a Share

question 76

Multiple Choice

A firm has a current price of $40 a share, an expected growth rate of 11 percent and expected dividend per share (D1) of $2. Given its risk, you have a required rate of return for it of 12 percent. Your expected rate of return and investment decision is as follows:

• A) 10 percent - do not buy
• B) 12 percent - do not buy
• C) 14 percent - buy
• D) 16 percent - buy
• E) 18 percent F- buy