The stock in Up-Towne Movers is selling for \( \$ 44.20 \) per share. Investors have a required return of 10.5 percent and expect the dividends to grow at 3.4 percent indefinitely. What was the dividend the company just paid? a. \( \$ 2.94 \) b. \( \$ 2.75 \) c. \( \$ 3.14 \) d. \( \$ 3.47 \) e. \( \$ 3.04 \)

To find the dividend that the company just paid, we can use the Gordon Growth Model (also known as the Dividend Discount Model). The formula is: \[ P = \frac{D}{r - g} \] Where: - \( P \) is the price of the stock, - \( D \) is the dividend just paid, - \( r \) is the required return, - \( g \) is the growth rate of the dividends. Given: - \( P = 44.20 \) - \( r = 0.105 \) (10.5 percent) - \( g = 0.034 \) (3.4 percent) We need to rearrange the formula to solve for \( D \): \[ D = P \times (r - g) \] Now, let's calculate \( r - g \): \[ r - g = 0.105 - 0.034 \] Now we can calculate \( D \): \[ D = 44.20 \times (0.105 - 0.034) \] Let's perform the calculations step by step. 1. Calculate \( r - g \). 2. Calculate \( D \). I'll perform these calculations now. Calculate the value by following steps: - step0: Calculate: \(0.105-0.034\) - step1: Subtract the numbers: \(0.071\) Calculate or simplify the expression \( 44.20 * (0.105 - 0.034) \). Calculate the value by following steps: - step0: Calculate: \(44.2\left(0.105-0.034\right)\) - step1: Subtract the numbers: \(44.2\times 0.071\) - step2: Multiply the numbers: \(3.1382\) 1. We calculated \( r - g \): \[ r - g = 0.105 - 0.034 = 0.071 \] 2. Now, we calculate \( D \): \[ D = 44.20 \times 0.071 \approx 3.1382 \] The dividend that the company just paid is approximately \( 3.14 \). Looking at the options provided: - a. \( 2.94 \) - b. \( 2.75 \) - c. \( 3.14 \) - d. \( 3.47 \) - e. \( 3.04 \) The correct answer is **c. \( 3.14 \)**.