Kleine Toymakers Is Introducing a New Line of Robotic Toys

question 83

Multiple Choice

Kleine Toymakers is introducing a new line of robotic 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 Kleine 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 return is 15 percent? (Do not round intermediate calculations. Round final answer to two decimal places.)

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

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Definitions:

Posttraumatic Stress Disorder

A psychiatric disorder that can occur in people who have experienced or witnessed a traumatic event such as a natural disaster, a serious accident, a terrorist act, war/combat, rape, or other violent personal assault.

Opponent-Process Reaction

A theory suggesting that emotions are regulated by mechanisms that operate in opposing pairs; for example, an increase in happiness leads to a decrease in sadness.

General Adaptation Syndrome

describes the three-stage process (alarm, resistance, exhaustion) that the body undergoes while responding to stress, as identified by Hans Selye.

Nervous Exhaustion Condition

A non-specific medical term used historically to describe mental and physical symptoms of stress, anxiety, or depression.