A Firm Has Experienced a Constant Annual Rate of Dividend

Multiple Choice

A firm has experienced a constant annual rate of dividend growth of 9 percent on its common stock and expects the dividend per share in the coming year to be $2.70. The firm can earn 12 percent on similar risk involvements. The value of the firm's common stock is _________ .

A) $30/share
B) $90/share
C) $22.50/share
D) $9/share