Kellner Motor Co.'s stock has a required rate of return of 11.50%, and it sells for $25.00 per share.Kellner's dividend is expected to grow at a constant rate of 7.00%.What was the last dividend, D₀? A) $0.95 B) $1.05 C) $1.16 D) $1.27 E) $1.40

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The Gordon Growth Model (also known as the Dividend Discount Model for a perpetuity) can be used to find the last dividend paid. The model is represented by the formula P = D1 / (r - g), where P is the price of the stock, D1 is the dividend next year, r is the required rate of return, and g is the growth rate of the dividend. Rearranging the formula to solve for D0 (the last dividend paid), we get D0 = P(r - g) / (1 + g), since D1 = D0(1 + g). Plugging in the values: D0 = $25(0.115 - 0.07) / (1 + 0.07) = $1.05.