Exhibit 20-4 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

Exhibit 20-4
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Davenport Corporation's last dividend was $2.70 and the directors expect to maintain the historic 3% annual rate of growth. You plan to purchase the stock today because you feel that the growth rate will increase to 5% for the next three years and the stock will then reach $25 per share.
-Refer to Exhibit 20-4. How much should you be willing to pay for the stock if you feel that the 5% growth rate can be maintained indefinitely and you require a 17% return?

A) $22.16
B) $19.28
C) $21.32
D) $23.63
E) $25.46