National Trucking has paid an annual dividend of $1 per share on its common stock for the past 15 years and is expected to continue paying a dollar per share long into the future. Given this, one share of the firm's stock is:

Question

BlackTom AI · Accepted Answer

Let’s break down what the problem is saying and evaluate each option against that setup.
Option 1: 'priced the same as a $1 perpetuity.' This aligns with the idea that a stock delivering a constant dividend of $1 forever (a perpetuity with no growth) should be valued like a perpetuity: price = dividend / required return. Since the dividend is constant and forever, the stock’s price behaves like a $1 perpetuity's price at the same discount rate. This option captures the essence of the no-growth perpetuity valuation commonly taught in dividend discount models.
Option 2: 'valued at an assumed growth rate of 1 percent.' This is inconsistent with the information: the dividend has been constant at $1 and is expected to continue paying $1 long into the future, i.e., there is no growth. Introducing a 1% growth assumption would contradict the statement that the dividend remains at $1.
Option 3: 'worth $1 per share in the current market.' This would imply the stock is worth exactly its annual dividend, which ignores the time value of money and the fact that the investor receives dividends indefinitely. In a standard no-growth perpetuity, the price is generally much higher than the annual dividend unless the required return is extremely high, so this is not correct.
Option 4: 'basically worthless as it offers no growth potential.' The absence of growth does not make a perpetuity worthless; the value comes from the stream of future dividends and the appropriate discount rate. For a perpetual, fixed dividend, the present value can be substantial rather than near zero, provided a reasonable discount rate.
Option 5: 'equal in value to the present value of $1 paid one year from today.' This captures only the PV of a single future payment, not the infinite series of $1 payments. The total stock value should reflect all future dividends, not just the next one, so this underestimates the price.
In summary, the reasoning consistent with a constant $1 dividend forever is that the stock's price should be evaluated as a no-growth perpetuity, making the first option the correct framing, while the remaining options misapply growth assumptions, misstate the valuation logic, or incorrectly limit the scope of the cash flows.

National Trucking has paid an annual dividend of $1 per share on its common stock for the past 15 years and is expected to continue paying a dollar per share long into the future. Given this, one share of the firm's stock is:单项选择题

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