National Trucking has paid an annual dividend of $1.00 per share on its common s
ID: 2612458 • Letter: N
Question
National Trucking has paid an annual dividend of $1.00 per share on its common stock for the past fifteen years and is expected to continue paying a dollar a share long into the future. Given this, one share of the firm's stock is:
basically worthless as it offers no growth potential.
equal in value to the present value of $1 paid one year from today.
priced the same as a $1 perpetuity.
valued at an assumed growth rate of one percent.
worth $1 a share in the current market.
A.basically worthless as it offers no growth potential.
B.equal in value to the present value of $1 paid one year from today.
C.priced the same as a $1 perpetuity.
D.valued at an assumed growth rate of one percent.
E.worth $1 a share in the current market.
Explanation / Answer
Same dividend is paying now and agreed to pay in the long future. Therefore, it is known as perpetuity
priced the same as a $1 perpetuity.
C.priced the same as a $1 perpetuity.
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