Multiple Choice
Sweatshirts Unlimited is downsizing.The company paid a $2.80 annual dividend last year.The company has announced plans to lower the dividend by 25 percent each year.Once the dividend amount becomes zero,the company will cease all dividends and go out of business.You have a required rate of return of 18 percent on this particular stock given the company's situation.What are your shares in this firm worth today on a per share basis?
A) $4.88
B) $6.91
C) $8.68
D) $19.29
E) $22.11
Correct Answer:
Verified
Correct Answer:
Verified
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