Assume That the Dividend Payout Ratio on the S&P 500

Assume that the dividend payout ratio on the S&P 500 will be 40 percent when the rate on long-term government bonds falls to 9 percent. Investors being risk averse demand an equity risk premium of 8 percent. If the growth rate of dividends is expected to be 10 percent, what will be the price of the market index if the earnings expectation is $30?

A) $384.00
B) $213.44
C) $266.56
D) $171.43