A Company Is Growing at a Constant Rate of 8

question 85

Multiple Choice

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 stock three years from now? (Do not round intermediate calculations. Round final answer to two decimal places.)

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

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Definitions:

Acromegaly

A hormonal disorder that develops when your pituitary gland produces too much growth hormone during adulthood, leading to enlarged bones in the face, hands, and feet.

Overgrowth

An excessive or abnormal increase in the size or number of cells in a body part, not necessarily linked to cancer.

Undergarments

Clothing worn under outer clothes, typically next to the skin, for hygiene, support, or body shaping purposes.

Head Circumference

A measurement around the largest part of the head, usually noted in infants and young children to assess brain and skull growth.