Problem:
The Farmer's Market just paid an annual dividend of $5 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a 13 percent return on the stock for the first 3 years, a 9 percent return for the next 3 years, a 7 percent return thereafter.
Required:
Question: What is the current price per share?
a) $212.40
b) $220.54
c) $223.09
d) $226.84
e) $227.50
Note: Please explain comprehensively and give step by step solution.