The Growth in Dividends of XYZ, Inc

Multiple Choice

The growth in dividends of XYZ, Inc. is expected to be 10% per year for the next two years, followed by a growth rate of 5% per year for three years. After this five-year period, the growth in dividends is expected to be 2% per year, indefinitely. The required rate of return on XYZ, Inc. is 12%. Last year's dividends per share were $2.00. What should the stock sell for today?

A) $8.99
B) $25.21
C) $40.00
D) $110.00
E) None of the options are correct.