Bonnie’s Bee Farm Inc. just had their annual board of directors meeting, where they decided they plan to start paying dividends in three years (at time 3). The first dividend will be $1.00. After that, they plan to increase the dividend by $.25 in each of the next three years. Then, they plan to increase the dividend by 5% in each year thereafter. Given all of this and a k = 8%, what is the expected price of the stock at time 7?
a. $56.72b.
c. $59.12
d. $49.50
e. $64.31