Helluva Stock Currently Pays a Dividend of $1

question 31

Multiple Choice

Helluva stock currently pays a dividend of $1.20 per share. Dividends are expected to increase at the rate of $0.10 per share for the next eight years. Determine the current value of Helluva common stock to an investor who expects to be able to sell the stock for $28 after 5 years. Assume that the investor requires a 12 percent rate of return on the security.

• A) $66.00
• B) $28.00
• C) $21.20
• D) $15.88