Eastern Auto Parts' last dividend was Do = $0.50, and the company expects to experience no growth in the next 2 years
However eastern will grow at an annual rate of 5% in the third and fourth years, and, beginning with the fifth year, it should attain a 10% growth rate which it should sustain thereafter. Eastern has a cost of capital of 12%. What should be the present price per share of Eastern common stock?
A) $19.26
B) $31.87
C) $30.30
D) $20.84
E) $19.95
D
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