The earnings of a corporation increase at 2.1% per quarter indefinitely. Each quarter the corporation plans to pay 40% of its earnings as a stock dividend. At the start of a quarter, an investor purchases the stock to yield a nominal rate of 10% compounded semiannually. The first stock dividend is $2 payable at the end of the quarter.

Calculate the theoretical price of the stock.

Possible Answers

A

541

B

527

C

480

D

426

E

365

actuarial class