Final Exam

The Red Bud Co. pays a constant dividend of $1.70 a share. The company announced today that it will continue to do this for another 2 years after which time they will discontinue paying dividends permanently. What is one share of this stock worth today if the required rate of return is 7.3 percent?

$1.89

$1.82

$3.40

$3.06

$4.76