Micro Corp

Multiple Choice

Micro Corp.just paid dividends of $2 per share.Assume that over the next three years dividends will grow as follows,5% next year,15% in year two,and 25% in year 3.After that growth is expected to level off to a constant growth rate of 10% per year.The required rate of return is 15%.Calculate the intrinsic value using the multistage model.

A) $5.56
B) $66.4
C) $49.31
D) $43.66
E) none of the above