Suppose That You Estimate D₁=$0

question 31

Multiple Choice

Suppose that you estimate D₁=$0.72,D₂=$0.76,D₃=$0.84,and D₄=$0.88 for a stock.You also estimate that,beginning at year 4,dividends will grow continually at a rate of 2% per year.If the required return to hold the stock is 14.6%,what is the stock's current price?

• A) $6.20
• B) $6.25
• C) $6.30
• D) $6.40