Exhibit 11.7 Use the Information Below for the Following Problem(S)

Exhibit 11.7
Use the Information Below for the Following Problem(S)
Consider a firm that has just paid a dividend of $1.5. An analyst expects dividends to grow at a rate of 9% per year for the next three 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 11.7.The dividends for years 1,2,and 3 are

A) $1.5, $2.0, $2.05
B) $1.64, $1.78, $1.94
C) $1.64, $1.94, $2.24
D) $1.5, $2.40, $3.30
E) $2.07, $2.14, $2.21