5. A stock expects to pay a year-end dividend of $2.00 a share. Last year's dividend has

already been paid. The dividend is expected to fall 5 percent a year, forever. The stock is in

equilibrium, and the expected rate of return is 15 percent. Which of the following statements is

most correct?

a. The company's stock price is $10.

b. The company's expected dividend yield 5 years from now will be 20 percent.

c. The company's stock price 5 years from now is expected to be $7.74.

d. Both answers b and c are correct.

e. All of the above answers are correct.