Graham Enterprises Anticipates That Its Dividend at the End of the Year

Multiple Choice

Graham Enterprises anticipates that its dividend at the end of the year will be $2.00 a share . The dividend is expected to grow at a constant rate of 7 percent a year. The risk-free rate is 6 percent, the market risk premium is 5 percent, and the company's beta equals 1.2. What is the expected price of the stock five years from now?

A) $52.43
B) $56.10
C) $63.49
D) $70.49
E) $72.54