Exhibit 20-5 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 29

Multiple Choice

Exhibit 20-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
The National Motor Company's last dividend was $1.25 and the directors expect to maintain the historic 4% annual rate of growth. You plan to purchase the stock today because you feel that the growth rate will increase to 7% for the next three years and the stock will then reach $25.00 per share.
-Refer to Exhibit 20-5. How much should you be willing to pay for the stock if you require a 16% return?

• A) $17.34
• B) $18.90
• C) $19.09
• D) $19.21
• E) None of the above

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Definitions:

Play Groups

Organized gatherings of children aimed at providing social interaction and play opportunities.

Time With Friends

Periods spent engaging in activities or interacting with friends, often considered important for social bonding and personal well-being.

Larger

Refers to something of a greater size, volume, or amount compared to another object or compared to a previous state.

Smaller

Of less size, amount, or scale compared to others of its kind.