PV of Dividends: TechWorld Ltd Is Expecting to Pay Out

question 70

Multiple Choice

PV of dividends: TechWorld Ltd is expecting to pay out a dividend of $2.50 next year. After that it expects its dividend to grow at 7 percent for the next four years. What is the present value of dividends over the next five-year period if the required rate of return is 10 percent?

• A) $10.75
• B) $9.80
• C) $11.88
• D) $11.50

Understand the mechanics and implications of government spending, the deficit, and the national debt.

Identify the major holders of U.S. Treasury securities.

Learn about the effects of government spending choices on the national debt and opportunity costs.

Understand the rationale and consequences of the Budget Enforcement Act of 1990.

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Definitions:

Average Propensity

Average Propensity refers to the average tendency of individuals or entities, such as the average propensity to consume or save, measured over a specific period or income level.

Disposable Income

The available cash reserves for households to spend and save once taxes on income have been settled.

Consumption

The use of goods and services by households; an economic activity that represents spending by consumers.

Average Propensity

The ratio of total consumption to total income, indicating the average tendency of consumers to spend their income.