The Wei Company's last dividend was $1.75. The dividend growth rate is expected to be constant at 1.50% for 2 years, after which dividends are expected to grow at a rate of 8.00% forever. Wei's required return (rs) is 12.00%. What is Wei's current share price?

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The correct answer is A because the current share price is $41.83. This is calculated using the Gordon Growth Model, which is:P0 = D1 / (rs - g)where:P0 is the current share priceD1 is the next dividend paymentrs is the required returng is the dividend growth rateIn this case, the last dividend was $1.75, the dividend growth rate is expected to be constant at 1.50% for 2 years, after which dividends are expected to grow at a rate of 8.00% forever. Wei's required return (rs) is 12.00%. So, the current share price is:P0 = $1.75 / (0.12 - 0.08) = $41.83

The Wei Company's Last Dividend Was $1