Exhibit 11.6 Use the Information Below for the Following Problem(S)

question 9

Multiple Choice

Exhibit 11.6
Use the Information Below for the Following Problem(S)
Consider a firm that has just paid a dividend of $2. An analyst expects dividends to grow at a rate of 8% per year for the next five years. After that dividends are expected to grow at a normal rate of 5% per year. Assume that the appropriate discount rate is 7%.
-Refer to Exhibit 11.6.The dividends for years 1,2,and 3 are

• A) $2, $2.08, $2.16
• B) $2, $2.05, $2.10
• C) $2.16, $2.24, $2.32
• D) $2.16, $2.33, $2.52
• E) $2.07, $2.14, $2.21

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