QUESTION $8$

Walter owns one share of stock of Abuela Pastries and one share of stock of Basura Baking. The total value of his holdings is $$1,015\mathrm{.}38.$ Both stocks pay annual dividends that are expected to continue forever. The expected return on Abuela Pastries stock is $12\mathrm{.}40$ percent and its annual dividend is expected to remain at $$26\mathrm{.}30$ forever. What is the next dividend paid by Basura Baking expected to be if the stock has an annual return of $9\mathrm{.}70$ percent and dividends are expected to grow by $3\mathrm{.}60$ percent annually? The next dividend for both firms' stocks will be paid in one year.

$$49\mathrm{.}00($plus or minus $5$ cents$)$

$$6549($plus or minus $5$ cents$)$

$$5076($plus or minus $5$ cents$)$

$$47.30($plus or minus $5$ cents$)$

the answer cannot be obtained based on the given information