USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 75

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider a firm that has just paid a dividend of $2. An analyst expects dividends to grow at a rate of 8 percent per year for the next five 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 8.3. The future price of the stock in year 5 is

• A) $113.40.
• B) $122.47.
• C) $132.27.
• D) $142.85.
• E) $154.35.

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Definitions:

James River

A significant river in Virginia, pivotal in the state's history and development, and serving as a key waterway for transportation and commerce.

Eastern Pennsylvania

A region in the Commonwealth of Pennsylvania, characterized by its rich historical importance, varied landscapes, and significant cultural and economic contributions to the state.

Sam Houston

An American soldier and politician, significant for his role in bringing Texas into the United States as a constituent state.

Texas's Secession

The act in 1861 when Texas declared its secession from the United States to join the Confederate States during the American Civil War.