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 future price of the stock in year 3 is

A) $81.75
B) $84.81
C) $92.56
D) $101.85
E) $111.16