If a Stock's Dividend Is Expected to Grow at a Constant

question 265

Multiple Choice

If a stock's dividend is expected to grow at a constant rate of 4 percent in the future and it has just paid a dividend of $6.00 per share,and you have an alternative investment of equal risk that will earn a 7 percent rate of return,what would you be willing to pay per share for this stock?

• A)$6.66
• B)$54.55
• C)$200.00
• D)$208.00

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Definitions:

Persisting Positive Charge

A lasting electrical charge characterized by an excess of protons, often seen in certain particles or materials.

Negative Charge

An electrical charge that results from an excess of electrons in an atom or molecule, leading to an attraction to positively charged particles.

Action Potential

A transient electrical charge that travels along a neuron's axon, enabling neural communication.

Glial Cells

Non-neuronal cells in the central nervous system that support, nourish, and protect neurons.