Your Company Paid a Dividend of $2

Multiple Choice

Your company paid a dividend of $2.00 last year. The growth rate is expected to be 4 percent for 1 year, 5 percent the next year, then 6 percent for the following year, and then the growth rate is expected to be a constant 7 percent thereafter. The required rate of return on equity (rs) is 10 percent. What is the current price of the common stock?

A) $53.45
B) $60.98
C) $64.49
D) $67.47
E) $69.21