PV of Dividends: Harvey's Toymakers Is Introducing a New Line

question 58

Multiple Choice

PV of dividends: Harvey's Toymakers is introducing a new line of digital toys, which it expects to grow their earnings at a much faster rate than normal over the next three years. After paying a dividend of $2.00 last year, it does not expect to pay a dividend for the next three years. After that Harvey's plans to pay a dividend of $4.00 in year 4 and then increase the dividend at a rate of 10 percent in years 5 and 6. What is the present value of the dividends to be paid out over the next six years if the required rate of rate of return is 15 percent?

• A) $13.24
• B) $12.00
• C) $6.57
• D) $10.24

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Definitions:

Correlation Coefficient

A numerical measure that indicates the extent and direction of the relationship between two variables, ranging from -1 to 1.

Television Violence

Refers to the depiction of violent acts and situations on television programming and its potential impact on viewers' behavior and attitudes towards violence.

Aggressive Behaviour

Actions or behaviors that intend to cause harm or pain to others, often manifesting as physical or verbal hostility.

Correlation

A statistical measurement that indicates the extent to which two variables fluctuate together.