Suppose an investor expects a common stock's dividends to be $1.00, $1.05, and $1.10 at the end of each of the next 3 years and expects to sell the stock for $20 in 3 years. If the investor requires a 20% rate of return, what is the stock's value today?

Time Cash Flows Cash Flows Ke = 20%

(Dividend) (Selling Price)

0 ($13.77)

1 1 1 ($0.83)

2 1.05 1.05 ($0.73)

3 1.1 20 21.1 ($12.21)

Answer: $13.77 (correct? or Incorrect?)