USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 12

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 price of the stock today (P₀) is

• A) $136.29.
• B) $133.03.
• C) $120.33.
• D) $123.43.
• E) $126.60.