Suppose XYZ is expected to increase dividends by 20% in one year and by 15% in two years. After that, dividends will decrease at a rate of 5% per year indefinitely. If the last dividend was $1 and the required return is 20%, what is the price of an XYZ share?

a.

$ 9.66

b.

$ 5.60

c.

$ 6.56

d.

$ 8.67

e.

$ 10.67