You Are Considering the Purchase of Wahoo, Inc

question 25

Multiple Choice

You are considering the purchase of Wahoo, Inc. The firm just paid a dividend of $4.20 per share. The stock is selling for $115 per share. Security analysts agree with top management in projecting steady growth of 12% in dividends and earnings over the foreseeable future. Your required rate of return for stocks of this type is 17.5%. If you were to purchase and hold the stock for three years, what would the expected dividends be worth today?

• A) $12.60
• B) $9.21
• C) $17.12
• D) $15.55
• E) $11.46

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Definitions:

Gross Domestic Product

The overall value, whether in market prices or monetary terms, of all final goods and services produced within the territorial limits of a country in a specific period.

Income Inequality

The unequal distribution of household or individual income across the various participants in an economy.

Primary Products

Goods that are available from cultivating raw materials without a manufacturing process.

Crop Supply

Crop supply denotes the total quantity of agricultural crops that are available in the market during a specific period.