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Dividend Initiation and Stock Value a Firm Does Not Pay

Question 95

Multiple Choice

Dividend Initiation and Stock Value A firm does not pay a dividend. It is expected to pay its first dividend of $0.15 per share in 3 years. This dividend will grow at 9 percent indefinitely. Using a 10 percent discount rate, compute the value of this stock.


A) $12.28
B) $12.40
C) $16.35
D) $16.50

Correct Answer:

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