Summer CoExpects to Pay a Dividend of $4

Multiple Choice

Summer Co.expects to pay a dividend of $4.00 per share-one year from now-out of earnings of $7.50 per share.If the required rate of return on the stock is 15% and its dividends are growing at a constant rate of 10% per year,calculate the present value of growth opportunities for the stock (PVGO) .

A) $80
B) $30
C) $50
D) $26