Problem:
Michael's, Inc. just paid $2.40 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 5.20 percent.
Required:
Question: If you require a rate of return of 9.4 percent, how much are you willing to pay today to purchase one share of Michael's stock?
a. $60.11
b. $26.86
c. $17.29
d. $62.51
e. $30.06
Note: Show all workings.