11

Holmgren Hotels' stock has a required return of 11 percent. The stock currently pays

a dividend of $1.00 per share. The dividend is expected to stay the same for two years. After two years, the

dividend is expected to grow at a rate of 7 percent forever. What should be Holmgren's stock price

today?

A.

$ 84.80

B.

$104.34

C.

$ 23.42

D.

$ 44.13

E.

$ 17.27