Given D_0 = $2.00/share, g1=20%, g2=15%, g3=10% after which it stabilizes at 5% per year forever. Estimate the current price, in $/share, of the stock given its required return to be 12%.

• A. 38.92
• B. 39.82
• C. 40.13
• D. 41.30

This answer is 38.92 Now answer.

Use the relevant data from Question 4, if the current stock price is $50.00 per share, what is the required rate of return? Assume growth rates remain unchanged.

• A. 10.14%
• B. 10.34%
• C. 10.46%
• D. 11.03%