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Question
What price would you pay today for a stock if you require a rate of return of 13%, the dividend growth rate is 3.6%, and the firm recently paid an annual dividend of $2.50?
A. $27.55
B. $30.28
C. $26.60
D. $31.37
Answer
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Related questions
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B. more than $20 million.
C. equal to $20 million.
D. unknown without knowing the maturity of the debt.
Q:
Which of the following is correct for a fully depreciated asset?
A. Market value is zero.
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D. The relationship between market and book values is indeterminable.
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During the Financial Crisis of 2007-2009, the U.S. government bailed out all of the following firms except:
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Q:
The opportunity cost of capital:
A. is the interest rate that the firm pays on a loan from a financial institution.
B. is the maximum acceptable rate of return on a project.
C. is the minimum acceptable rate of return on a project.
D. is always less than 10%.
Q:
Excess cash held by a firm should be:
A. reinvested by the firm in projects offering the highest rate of return.
B. reinvested by the firm in projects offering rates of return higher than the cost of capital.
C. reinvested by the firm in the financial markets.
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Q:
A capital investment that generates a 10% rate of return is worthwhile if:
A. corporate bonds of similar risk offer 8% rates of return.
B. corporate bonds of similar risk offer 11% rates of return.
C. top-quality corporate bonds offer 10% rates of return.
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Q:
Which mutually exclusive project would you select, if both are priced at $1,000 and your required return is 15%: Project A with three annual cash flows of $1,000; or Project B, with 3 years of zero cash flow followed by 3 years of $1,500 annually?
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Q:
What is the NPV for the following project cash flows at a discount rate of 15%? C0 = ($1,000), C1 = $700, C2 = $700.
A. ($308.70)
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Q:
When a project's internal rate of return equals its opportunity cost of capital, then the:
A. project should be rejected.
B. project has no cash inflows.
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Q:
The internal rate of return is most reliable when evaluating:
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What should you pay for a stock if next year's annual dividend is forecast to be $5.25, the constant-growth rate is 2.85%, and you require a 15.5% rate of return?
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What should be the price for a common stock paying $3.50 annually in dividends if the growth rate is zero and the discount rate is 8%?
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If the dividend yield for year 1 is expected to be 5% based on a stock price of $25, what will the year 4 dividend be if dividends grow annually at a constant rate of 6%?
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Q:
It is possible to ignore cash dividends that occur far into the future when using a dividend discount model because those dividends:
A. will most likely be paid to a different investor.
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A. $24.30
B. $18.00
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According to the semistrong form of market efficiency, when new information becomes available in the market, the related stock prices will:
A. remain unchanged because they already reflect this information.
B. accurately and rapidly adjust to include this new information.
C. adjust to accurately reflect this new information over the course of the next few days.
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