Kay's Sewing Loft Is Going to Reduce Its Annual Dividend

Multiple Choice

Kay's Sewing Loft is going to reduce its annual dividend by 10 percent a year for the next two years. After that, it will maintain a constant dividend of $2 a share. Last year, the company paid an annual dividend of $3 per share. What is the market value of this stock if the required return is 13.7 percent?

A) $14.63
B) $15.55
C) $15.08
D) $14.19
E) $15.84