Simplicity is a relatively new firm that appears to be on the road to great success. The company paid their first annual dividend yesterday in the amount of $0.15 a share. The company plans to double each annual dividend payment for the next four years. After that time, they are planning on paying a constant dividend of $2.50 per share indefinitely. What is one share of this stock worth today if the market rate of return on similar securities is 13.45%?
A) $12.32
B) $12.77
C) $13.77
D) $14.22
E) $14.37

Question

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The Answer of Simplicity is a relatively new firm that appears to be on the road to great success. The company paid their first annual dividend yesterday in the amount of $0.15 a share. The company plans to double each annual dividend payment for the next four years. After that time, they are planning on paying a constant dividend of $2.50 per share indefinitely. What is one share of this stock worth today if the market rate of return on similar securities is 13.45%?
A) $12.32
B) $12.77
C) $13.77
D) $14.22
E) $14.37

Simplicity Is a Relatively New Firm That Appears to Be