Yesteryear Productions Pays No Dividend at the Present Time

Multiple Choice

Yesteryear Productions pays no dividend at the present time.The company plans to start paying an annual dividend in the amount of $0.40 a share for two years commencing four years from today.After that time,the company plans on paying a constant $0.75 a share annual dividend indefinitely.How much are you willing to pay to buy a share of this stock today if your required return is 11.6 percent?

A) $3.78
B) $4.22
C) $4.37
D) $4.71
E) $4.98