USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 58

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider a firm that has just paid a dividend of $1.5. An analyst expects dividends to grow at a rate of 9 percent per year for the next three years. After that dividends are expected to grow at a normal rate of 5 percent per year. Assume that the appropriate discount rate is 7 percent.
-Refer to Exhibit 8.4. The dividends for years 1, 2, and 3 are

• A) $1.5, $2.0, and $2.05.
• B) $1.64, $1.78, and $1.94.
• C) $1.64, $1.94, and $2.24.
• D) $1.5, $2.40, and $3.30.
• E) $2.07, $2.14, and $2.21.

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