Which of the Following Values Is Closest to the Amount

question 43

Multiple Choice

Which of the following values is closest to the amount that should be paid for a stock that will pay a dividend of $10 one year from now and $11 two years from now? The stock will be sold in 2 years for an estimated price of $120. The appropriate discount rate is 9%.

• A) $114.
• B) $119.
• C) $124.
• D) $129.
• E) $138.