A Stock Is Expected to Pay $0

question 7

Multiple Choice

A stock is expected to pay $0.70 per share every year indefinitely. If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 7.9%, what price would an investor be expected to pay per share five years into the future?

• A) $8.86
• B) $14.18
• C) $14.62
• D) $15.06

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Definitions:

Professionalism

The demonstration of skills, competence, and behaviors expected by professionals in a work setting, reflecting respect and ethical standards.

Polite Behavior

Conduct that is respectful and considerate towards others.

Good Judgment

The ability to make sensible decisions based on a balanced consideration of facts, analysis, and experiences.

Biomedical Ethics

Considering autonomy, non-maleficence, beneficence, and justice when providing care.