A Fast Growing Firm Recently Paid a Dividend of $1

Multiple Choice

A fast growing firm recently paid a dividend of $1.00 per share. The dividend is expected to increase at a rate of 15% rate for the next 3 years. Afterwards, a more stable 6% growth rate can be assumed. If a 10% discount rate is appropriate for this stock, what is its value?

A) $33.54
B) $37.99
C) $39.37
D) $42.03