Nu-Tek,Inc

Multiple Choice

Nu-Tek,Inc.is expecting a period of intense growth and has decided to retain more of its earnings to help finance that growth.As a result it is going to reduce its annual dividend by 10% a year for the next three years.After that,it will maintain a constant dividend of €.70 a share.Last month,the company paid €1.80 per share.What is the value of this equity if the required rate of return is 13%?

A) €6.79
B) €7.22
C) €8.22
D) €8.87
E) €9.01