Problem:
The Ramirez Company's last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%.
Required:
Question: What is the best estimate of the current stock price?
Choose one answer.
A. $43.71
B. $44.80
C. $41.58
D. $42.64
Note: Show supporting computations in good form.