Exhibit 11.8 Use the Information Below for the Following Problem(S)

Multiple Choice

Exhibit 11.8
Use the Information Below for the Following Problem(S)
Fast Grow Corporation is expecting dividends to grow at a 20% rate for the next two years. The corporation just paid a $2 dividend and the next dividend will be paid one year from now. After two years of rapid growth dividends are expected to grow at a constant rate of 9% forever.
-Refer to Exhibit 11.8.Assume that the annual dividend grows at a constant rate of 9% indefinitely instead of the supernormal growth.How much is the stock worth if dividends grow annually at 9%?

A) $40.00
B) $43.60
C) $45.60
D) $47.80
E) $52.40