A Company Just Paid an Annual Dividend of

question 75

Multiple Choice

A company just paid an annual dividend of $.40 a share and plans to increase the dividend by 7 percent a year for the next 6 years and then increase it by 4 percent annually thereafter.What is the value of this stock at the end of Year 6 if the discount rate is 11 percent?

• A)$10.63
• B)$8.92
• C)$9.68
• D)$10.21
• E)$9.37

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