The treasurer is concerned that ABC doesn't have enough cash to pay dividends next year. If the firm decided not to pay dividends at all next year and pay $$1\mathrm{.}50$ per share the following year, and grow at $5\%$ per year indefinitely after that,

a$.$ What is the effect on the price of stock from its baseline practice of increasing dividends per share by $5\%$ per year indefinitely?

i$.$ The price drops by $6\%$

ii$.$ The price drops by $11\%$

iii. The price drops by $14\mathrm{.}20\%$

iv$.$ The price drops by $16\%$

v$.$ The price drops by $16\mathrm{.}55\%$

b$.$ What is the dividend yield?

i$.0\%$

ii$.5\%$

iii. $6\%$

iv$.11\%$

Page $2$ of $5$

c$.$ What is the expected capital gains yield?

i$.0\%$

ii$.5\%$

iii. $6\%$

iv$.11\%$

d$.$ What is the expected price per share next year?

i$.$ $$31\mathrm{.}50$

ii$.$ $$30\mathrm{.}00$

iii. $$25\mathrm{.}00$

iv$.$ $$13\mathrm{.}64$

v$.$ $$26\mathrm{.}25$