Question
QUESTION 2 During the past 8 years, UTX Company common stock dividends have grown from $2.70 to $5.00 per share (currently). Determine the value of
QUESTION 2
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During the past 8 years, UTX Company common stock dividends have grown from $2.70 to $5.00 per share (currently). Determine the value of UTX common stock to an investor who requires a 16% rate of return, assuming that dividends continue growing for the foreseeable future at the same rate as over the past 8 years.
a. $46.96
b. $62.50
c. $31.25
d. $67.50
0.5 points
QUESTION 3
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During the past 8 years, Beef Wellington Cattle Company's common stock dividends have grown from $2.00 to $3.19. Estimate the compound annual dividend growth rate over the 8-year period.
a. 19%
b. 59.5%
c. 12%
d. 6%
0.5 points
QUESTION 4
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Dillinger Inc. is planning to raise additional capital for expansion by selling 500,000 common shares at $16 each. The existing stockholders' equity section of its balance sheet is shown below. What will the retained earnings figure be immediately after the sale of the new equity?
Common stock; $1 par value; authorized, 3,000,000 shares; issued and outstanding, 3,000,000 shares $3,000,000
Additional paid-in capital $6,500,000
Retained earnings $4,752,000
Total stockholders' equity $14,252,000
a. $14,000,000
b. $12,252,000
c. $4,752,000
d. $3,500,000
0.5 points
QUESTION 5
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In the constant growth dividend valuation model, it is assumed that the ____.
a. firm is experiencing a period of poor performance, after which normal growth is expected
b. dividend growth rate exceeds the required rate of return
c. firm's future dividend payments are expected to grow at a constant rate forever
d. dividend cannot be forecast for any future time
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