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Author Question: Cascade Industries Inc intends to pay a common stock dividend of 3.18 one year from today and the ... (Read 18 times)

yoroshambo

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on: Jul 11, 2018
Cascade Industries Inc intends to pay a common stock dividend of 3.18 one year from today and the firm anticipates that the dividend will continue to grow at a rate of 2 per year indefinitely.
 
  If the firm has a 13 required rate of return, what is the current price per share of stock?
  A) 21.20
  B) 28.91
  C) 21.62
  D) 29.49

Question 2

If your investment goal is merely to match the overall market, you should invest in an index fund.
 
  Indicate whether the statement is true or false


fraziera112

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Reply #1 on: Jul 11, 2018
Answer to Question 1

B
Explanation: B) PV = (Div one)/(r-g) = 3.18/(.13-.02 ) = 28.91.

Answer to Question 2

TRUE


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