Constant Growth: a Company Is Growing at a Constant Rate

question 31

Multiple Choice

Constant growth: A company is growing at a constant rate of 8 percent. Last week it paid a dividend of $3.00. If the required rate of return is 15 percent, what is the price of the share three years from now?

• A) $58.31
• B) $46.29
• C) $51.02
• D) $42.83

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Definitions:

Informational Social Influence

The process of changing one's behavior or beliefs in response to perceived expertise or knowledge of others.

Conformity Pressures

Social forces that compel individuals to align their attitudes, beliefs, or behaviors with those of a group.

Personal Control

An individual's belief in their ability to influence events and their outcomes, often associated with psychological well-being.

Cognitive Dissonance

A psychological discomfort experienced when holding two or more conflicting beliefs, values, or attitudes, prompting an individual to seek consistency.