Hirshfeld Corporation's stock has a required rate of return of 10.25%, and it sells for $57.50 per share. The dividend is expected to grow at a constant rate of 6.00% per year. What is the expected year-end dividend, D₁? A) $2.20 B) $2.44 C) $2.69 D) $2.96 E) $3.25

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$\begin{array}{lr}
\text { Stock price } & \$ 57.50 \
\text { Required return } & 10.25 \% \
\text { Growth rate } & 6.00 \% \
\mathrm{P}_{0}=\mathrm{D}_{1} /\left(\mathrm{r}_{\mathrm{S}}-\mathrm{g}\right), \text { so } \mathrm{D}_{1}=\mathrm{P}_{0}\left(\mathrm{r}_{\mathrm{S}}-\mathrm{g}\right) & \
\text { Expected dividend }=\mathrm{D}_{1}=\mathrm{P}_{0}\left(\mathrm{r}_{\mathrm{S}}-\mathrm{g}\right)=& \$ 2.44
\end{array}$

Hirshfeld Corporation's Stock Has a Required Rate of Return of 10.25