Nico Custom Cycles' Common Stock Currently Pays No Dividends

question 115

Multiple Choice

Nico Custom Cycles' common stock currently pays no dividends. The company plans to begin paying dividends beginning 3 years from today. The first dividend will be $3.00 and dividends will grow at 5 percent per year thereafter. Given a required return of 15 percent, what would you pay for the stock today?

• A) $25.33
• B) $18.73
• C) $29.86
• D) $20.72

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