X-Tel Corporation's Dividends in Year 1 and 2 Are Expected

question 58

Multiple Choice

X-Tel Corporation's dividends in year 1 and 2 are expected to be $3 and $4 respectively. Year 2's stock price is expected to be $40 per share. If the investor's return is 10%, determine the stock price now.

• A) $39.09
• B) $39.92
• C) $40.35
• D) $40.98
• E) $41.46