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Bruce Wayne, a brilliant financial analyst, forecasts that Gotham Gadgets will pay a $1 annual dividend one year from now, then pay a $1.20 annual
Bruce Wayne, a brilliant financial analyst, forecasts that Gotham Gadgets will pay a $1 annual dividend one year from now, then pay a $1.20 annual dividend in the following year. Right after the second annual dividend ($1.20) the firm's annual dividend will start growing at a constant 10% rate forever. What would you be willing to pay for one share of Gotham Gadgets stock if your required rate of return is 15%?
A. $19.14
B. $19.40
C. $19.92
D. $21.74
E. $22.01
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