Newburn Entertainment's Stock Is Expected to Pay a Year-End Dividend

Multiple Choice

Newburn Entertainment's stock is expected to pay a year-end dividend of $3.00 a share. (D1 = $3.00, the dividend at time 0, D0, has already been paid.) The stock's dividend is expected to grow at a constant rate of 5 percent a year. The risk-free rate, rRF, is 6 percent and the market risk premium, (rM - rRF) , is 5 percent. The stock has a beta of 0.8. What is the stock's expected price five years from now?

A) $60.00
B) $76.58
C) $96.63
D) $72.11
E) $68.96