Using the Stock Valuation Formula Calculate the Value of a Share

question 177

Multiple Choice

Using the stock valuation formula calculate the value of a share of stock if it is expected to pay $15 in dividends,in addition the dividends are expected to grow at a rate of 8 percent forever,and the investor's required rate of return is 10 percent.

• A)$6.50
• B)$750
• C)$12.00
• D)$14.50

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Definitions:

Tax Revenue

The revenue collected by governments via taxes.

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These are taxes levied on individuals or households based on their total income from various sources, after allowances for deductions and credits.

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Taxes imposed on the income or profit of corporations, which can affect their investment decisions and economic growth.

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Transactions where goods or services are exchanged for money, usually considered a measure of a business's success or economic activity in a market.