Banner Corporation will not pay dividends until year 3, whereby it is expected to pay $5 in dividends. Dividends are then expected to grow at 20%, 10% and 5% in years 4, 5 and 6.
Afterwards, dividend growth will stabilize to 2% consistently. If the rate of return is 10%, determine
The stock price in year 3.
A) $83.84
B) $84.34
C) $84.84
D) $85.34
E) $85.84
Correct Answer:
Verified
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