1. Consider three stocks:

a. Stock A is expected to provide a dividend of $11 a share forever.

b. Stock B is expected to pay a dividend of $4.50 next year. Thereafter, dividend growth is expected to be 5% a year forever.

c. Stock C is expected to pay a dividend of $7 next year. Thereafter, dividend growth is expected to be 15% a year for five years (i.e., years 2 through 6) and zero thereafter.

If the market capitalization rate for each stock is 10%, which is most valuable?

1)Stock A

2)Stock B

3)Stock C

4)Not enough info