Microsoft Inc.'s dividends are expected to grow at a rate of 1% per year in perpetuity.If the appropriate rate of return on such investments is 11% and the price of a Microsoft share is $20.20,then what is the consensus market estimate of the next dividend? (Assume that next dividend will be paid in one year.)
A) $2.02
B) $2.22
C) $2.12
D) $2.17
E) $2.24
Correct Answer:
Verified
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