QUESTION 9

1. A company just paid an annual dividend of $0.75 per share. The dividends are expected to grow at 35 percent for year one, 25 percent for year two and 15 percent for year three, after which it will grow at a constant rate of 5.5 percent per year forever. If the required return is 12.5 percent, what is the current stock price of this company?

$14.43

$12.10

$23.33

$18.33

$9.74