Calculate net present value of stocks


Question: A stock is expected to pay a dividend of $1.00 at the end of the year (D1 $1.00), which is expected to grow 25 percent in each of the following two years and at a constant rate of 6 percent, thereafter. If the stock's required return is 11 percent, calculate the stock's price today?

[A] $30.48

[B] $32.71

[C] $35.38

[D] $26.14

[E] $27.28

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Finance Basics: Calculate net present value of stocks
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