BubbleCom Inc

question 60

Multiple Choice

Bubble.com Inc.currently pays no dividends.You overhear the CFO tell the CEO that the plan is to begin paying annual dividends in 5 years.The first dividend will be $2 and dividends are expected to grow at 5% in perpetuity thereafter.Given a required return of 11%,what should the price of the stock be today?

• A) $19.78
• B) $20.77
• C) $21.96
• D) $24.24
• E) $24.37

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