Hi-Tek Is a Young Start-Up Company That Is Currently Retaining

Multiple Choice

Hi-Tek is a young start-up company that is currently retaining all of its earnings. The company plans to pay a $2 per share dividend in Year 7 and  increase that dividend by 2.2 percent per year thereafter. What is the current share price if the required return is 16 percent?

A) $5.95
B) $6.62
C) $8.59
D) $14.29
E) $11.78