PV of Dividends: MineCast Has Not Paid Out Any Dividend

question 38

Multiple Choice

PV of dividends: MineCast has not paid out any dividend in the last three years. It does not expect to pay dividends in the next two years either as it recovers from an economic slowdown. Three years from now it expects to pay a dividend of $2.50 and then $3.00 in the following two years. What is the present value of the dividends to be received over the next five years if the discount rate is 15 percent?

• A) $4.85
• B) $5.37
• C) $5.50
• D) $6.14