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A Stock Is Expected to Pay $0

Question 34

Multiple Choice

A stock is expected to pay $0.70 per share every year indefinitely. If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 7.9%, what price would an investor be expected to pay per share five years into the future?


A) $8.86
B) $14.18
C) $14.62
D) $15.06

Correct Answer:

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