Consider a Firm That Had Been Priced Using a 6

Multiple Choice

Consider a firm that had been priced using a 6 percent growth rate and a 9 percent required rate. The firm recently paid a $0.50 dividend. The firm has just announced that because of a new joint venture, it will likely grow at an 8 percent rate. How much should the stock price change (in dollars and percentage) ?

A) $33.33, 67 percent
B) $33.33, 198 percent
C) $36.33, 67 percent
D) $36.33, 206 percent