Shares in Softec Ltd Is Currently Selling for $42

question 20

Multiple Choice

Shares in Softec Ltd is currently selling for $42.86.It is expected to pay a dividend of $3.00 at the end of the year.Dividends are expected to grow at a constant rate of 3% indefinitely.Calculate the required rate of return on FBC shares.

• A)10%
• B)33%
• C)7%
• D)4.3%

---

Definitions:

Efficient Use

The allocation of resources in a manner that maximizes the output of goods and services with minimal waste.

Simplifying Assumptions

Simplifying Assumptions are used in economic models to reduce complexity by assuming ideal conditions that may not always reflect real-life scenarios.

Economic Growth

An increase in the economy’s ability to produce goods and services; reflected by an outward shift of the economy’s production possibilities frontier

Unattainable Combinations

refers to product mix scenarios that cannot be achieved with the current resources or technology in economic or production contexts.