PV of Dividends: Jacobs Suppliers Has Not Paid Out Any

question 91

Multiple Choice

PV of dividends: Jacobs Suppliers has not paid out any dividend in the last three years. It does not expect to pay dividends in the next two years either as it recovers from an economic slowdown. Three years from now it expects to pay a dividend of $2.50 and then $3.00 in the following two years. What is the present value of the dividends to be received over the next five years if the discount rate is 15 percent?

• A) $4.85
• B) $5.37
• C) $5.50
• D) $6.14

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Definitions:

Meganational Strategy

A business strategy that emphasizes operating and competing in multiple countries as if they were a single global market.

Capital Investments

Expenditures by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Personal Control

The use of frequent human interaction to enforce control.

Normative Control

Control that gets subunits to adhere to the values of the organization.