You want to invest in a stock that pays $2.00 annual cash dividends for the next four years. At the end of the four years, you will sell the stock for $27.00. If you want to earn 11% on this investment, what is a fair price for this stock if you buy it today?

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Part 1

A.

$27.90

B.

$25.42

C.

$21.45

D.

$23.99