Taylor Tools Is a Young Start-Up Company

Taylor Tools is a young start-up company. No dividends will be paid on the stock over the next 7 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a $9 per share dividend in year 8 and will increase the dividend by 4 percent per year thereafter. If the required return on this stock is 12 percent, what is the current share price?

A) $47.76
B) $50.89
C) $64.30
D) $92.08
E) $112.50