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German Resources is involved in coal mining. The company is currently profitable and is expected to pay a dividend of 4 per share next year.

German Resources is involved in coal mining. The company is currently profitable and is expected to pay a dividend of 4 per share next year. The company has suspended explo-ration, however, and because its current mature operations exhaust the existing mines, you expect that the dividends paid by the company will decline forever at an 8 percent rate. The required return on German Resources stock is 11 percent. Using the DDM, what is the value of the stock?

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$24.23

$20.02

$21.05

$19.90

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