Exhibit 20-6 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

Exhibit 20-6
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Consider a firm that has just paid a dividend of $2. An analyst expects dividends to grow at a rate of 8% per year for the next five years. After that dividends are expected to grow at a normal rate of 5% per year. Assume that the appropriate discount rate is 7%.
-Refer to Exhibit 20-6. What are the dividends for years 1, 2, and 3?

A) $2, $2.08, $2.16
B) $2, $2.05, $2.10
C) $2.16, $2.24, $2.32
D) $2.16, $2.33, $2.52
E) $2.07, $2.14, $2.21