The Elder Co

Multiple Choice

The Elder Co.is in downsizing mode.The company paid an annual dividend of $2.50 last year.The company has announced plans to lower the dividend by $.50 a year.Once the dividend amount becomes zero,the company will cease all dividends permanently.The required rate of return is 14.5 percent.What is one share of this stock worth?

A) $3.85
B) $3.48
C) $4.87
D) $4.13
E) $4.39