Exhibit 11.6 Use the Information Below for the Following Problem(S)

Exhibit 11.6
Use the Information Below for the Following Problem(S)
Consider a firm that has just paid a dividend of $2. An analyst expects dividends to grow at a rate of 8% per year for the next five years. After that dividends are expected to grow at a normal rate of 5% per year. Assume that the appropriate discount rate is 7%.
-Refer to Exhibit 11.6.The present value today of dividends for years 1 to 5 is

A) $4.06
B) $10.28
C) $12.40
D) $14.52
E) $10.0