Combined Communications Is a New Firm in a Rapidly Growing

Multiple Choice

Combined Communications is a new firm in a rapidly growing industry.The company is planning on increasing its annual dividend by 15 percent a year for the next 4 years and then decreasing the growth rate to 3.5 percent per year.The company just paid its annual dividend in the amount of $0.20 per share.What is the current value of one share of this stock if the required rate of return is 15.5 percent?

A) $1.82
B) $2.04
C) $2.49
D) $2.71
E) $3.05