The Last Paid Dividend Is $2 for a Share of Common

question 26

Multiple Choice

The last paid dividend is $2 for a share of common stock that is currently selling for $20. What is the cost of common equity if the long-term growth rate in dividends for the firm is expected to be 8%?

• A) 10.8%
• B) 12.8%
• C) 14.8%
• D) 16.8%
• E) 18.8%

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Definitions:

Less Of

A comparative term indicating a reduced quantity or degree of something.

Marginal Utility

The additional satisfaction or utility that a consumer receives from consuming an additional unit of a good or service.

Money Income

The total amount of monetary earnings or receipts accruing to an individual or household from various sources before any deductions like taxes.

Total Utility

The complete fulfillment experienced when a certain amount of products or services is consumed.