A Stock Is Expected to Pay Dividends of $1

question 26

Multiple Choice

A stock is expected to pay dividends of $1.20 per share in Year 1 and $1.35 per share in Year 2.After that,the dividend is expected to increase by 2.5% annually.What is the current value of the stock at a discount rate of 14.5%?

• A) $11.29
• B) $10.87
• C) $12.07
• D) $13.39

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