Charlie Is Valuing a Common Stock with Forecast Dividends as Shown

question 13

Multiple Choice

Charlie is valuing a common stock with forecast dividends as shown below.He thinks that 10% is an appropriate discount rate.What is the most he should pay for the stock?
$\begin{array}{|r|r|c|c|c|}\hline \mathrm{D}_{1} & \mathrm{D}_{2} & \mathrm{D}_{3} & \mathrm{D}_{4} & \text { Later } \\\hline \$ 2.00 & \$ 2.40 & \$ 2.76 & \$ 3.17 & 6 \% \text { growth } \\\hline\end{array}$

• A)$60.20
• B)$63.25
• C)$65.42
• D)$84.01

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Definitions:

Orpiment

A natural mineral composed of arsenic sulfide (As2S3), historically used as a pigment and with various industrial and medicinal applications.

Soluble Sulfide

A compound containing the sulfide ion that is soluble in water, often producing hydrogen sulfide gas upon contact with acid.

Arsenic

A toxic metalloid element with the symbol As and atomic number 33, known for its various allotropes and compounds.

Calcium Oxalate

A chemical compound that forms needle-shaped crystals and is a common constituent of kidney stones in the human body.