Sessler Manufacturers made two announcements concerning its common stock today.First,the company announced that the next annual dividend will be $1.75 a share.Secondly,all dividends after that will decrease by 1.5 percent annually.What is the maximum amount you should pay to purchase a share of this stock today if you require a 14 percent rate of return?
A)$11.29
B)$12.64
C)$13.27
D)$14.00
E)$14.21

Question

Quizplus · Accepted Answer

The correct answer is A because the maximum amount you should pay to purchase a share of this stock today if you require a 14 percent rate of return is $11.29.

Sessler Manufacturers Made Two Announcements Concerning Its Common Stock Today