Later on Today,you Will Receive an Annual Dividend of $2

Multiple Choice

Later on today,you will receive an annual dividend of $2.50 a share on ABC stock.The dividend is expected to increase by 2 percent annually thereafter.Which formula should be used to compute the value of the stock today if the discount rate is 14 percent?

A) $2.50 + $2.50 / 0.14
B) ($2.50 × 1.02) / (0.14 - 0.02)
C) ($2.50 × 1.02) / 0.14
D) $2.50 + ($2.50 × 1.02) / (0.14 - 0.02)
E) $2.50 + ($2.50 × 1.02) / 0.14