Value of Future Cash Flows a Firm Recently Paid a $1.00

Multiple Choice

Value of Future Cash Flows A firm recently paid a $1.00 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be $100. If the required rate for this stock is 14 percent, what is its current value?

A) $25.00
B) $36.60
C) $62.87
D) $72.30