Sorenson Corp

question 11

Multiple Choice

Sorenson Corp.'s expected year-end dividend is D₁ = $1.50,its required return is r_s = 12.00%,its dividend yield is 8.00%,and its growth rate is expected to be constant in the future.What is Sorenson's expected stock price in 7 years,i.e.,what is P₇?

• A)$24.67
• B)$25.91
• C)$27.20
• D)$28.56

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Definitions:

Expense Recognition Principle

An accounting guideline that expenses should be recognized in the period in which they are incurred, regardless of when the payment is made.

Cost Of Goods Sold

Direct expenses involved in producing goods for sale by a company, covering both materials and workforce costs.

Ending Merchandise Inventory

The final value of goods available for sale at the end of an accounting period, before any new inventory has been added.

Specific Identification Method

An inventory costing method where specific costs are attached to individual units of inventory, typically used for unique or high-value items.