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12. This morning you purchased one share of stock for $14. The stock pays $.20 per...

12.

This morning you purchased one share of stock for $14. The stock pays $.20 per share each quarter as a dividend. What must the stock price be one year from now if you want to earn a total return of 12 percent for the year?

$14.54

$13.12

$13.46

$15.01

$14.88

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Answer #1

Correct answer is E. 14.88

Total return = [P1-P0+(Dividend per year) ] /P0

.12 = [P1 - $14 + (4 × $.20)]/$14
P1= $14.88

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