A Stock Just Paid a Dividend of D₀ = $1

question 49

Multiple Choice

A stock just paid a dividend of D₀ = $1.50.The required rate of return is r_s = 10.1%, and the constant growth rate is g = 4.0%.What is the current stock price?

• A) $23.11
• B) $23.70
• C) $24.31
• D) $24.93
• E) $25.57

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Definitions:

Down Payment

An initial, upfront payment made for the purchase of an asset, with the balance of the price to be paid later.

Present Value

The valuation today of an incoming stream of cash or one-time future payment, after accounting for a specified rate of return.

Cash Outflows

Money or cash disbursed by the business for various purposes, such as paying expenses, investing in assets, or repaying debts.

Cash Inflows

Money received by a business from its various activities, including sales, financing, and investments.