The Earnings of Foggy Futures Weather Forecasting Company Are Expected

Multiple Choice

The earnings of Foggy Futures Weather Forecasting Company are expected to grow at an annual rate of 14% over the next 5 years and then slow to a constant rate of 10% per year. Foggy currently pays a dividend of $0.36 per share. What is the value of Foggy's stock to an investor who requires a 16% rate of return?

A) $7.97
B) $7.76
C) $14.42
D) $11.11