Exhibit 20-7 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 65

Multiple Choice

Exhibit 20-7
USE THE FOLLOWING INFORMATION FOR THE NEXT 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% per year for the next three years. After that dividends are expected to grow at a normal rate of 5% per year. Assume that the appropriate discount rate is 7%.
-Refer to Exhibit 20-7. What is the future price of the stock in year 3?

• A) $81.75
• B) $84.81
• C) $92.56
• D) $101.85
• E) $111.16

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Definitions:

Poor Performer

An individual in a group or organization who consistently fails to meet expected standards of work performance.

Machiavellian Tendencies

Machiavellian Tendencies describe behaviors focused on manipulation, deceit, and exploitation to achieve personal goals.

Manipulate

To control or influence a person, situation, or system, often in a skillful but unfair or deceitful manner.

Personal Gain

The benefit or advantage that an individual receives or seeks from an action or decision, usually in the context of careers, business, or personal development.