Sandra is considering an investment in Algae Ltd. The shares of the company are currently trading at $23.50 per share. Over the next year, she believes that Algae will pay dividends of $1.50 per share and that the dividend will increase by about 3% per year. Her required rate of return is 9%. What is the intrinsic value of shares in Algae?

The formula for the dividend-valuation growth model is:

V = [Do x (1 + g)] + (r, - g)

where:

. r, = the investor's required annual rate of return

Do = the expected initial dividend payment g = the anticipated annual growth in future dividend payments .

a) $17.17

b) $23.50

c) $25.00

d) $25.75