Kramerica, Inc.
Kramerica Inc. just paid its investors a dividend of $2.00. This growing company expects dividends to grow at 20% for the next 2 years. After year 2, dividends are expected to grow constantly at 5% per year. Investors require a 15% return on Kramerica stock.
-What will be the dividend in two years for Kramerica?
A) $2.21
B) $2.40
C) $2.52
D) $2.88
Correct Answer:
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