A Company Just Paid an Annual Dividend of

Multiple Choice

A company just paid an annual dividend of $.40 a share and plans to increase the dividend by 7 percent a year for the next 6 years and then increase it by 4 percent annually thereafter.What is the value of this stock at the end of Year 6 if the discount rate is 11 percent?

A) $10.63
B) $8.92
C) $9.68
D) $10.21
E) $9.37