Static Inc has had a hard time recently. In order to help the firm survive a downturn in the market for its products, management has announced that it doesn't plan to pay dividends for the next three years. A modest dividend of $2.00 is projected for the fourth year after which dividends are expected to grow at 5% indefinitely. Similar stocks return 10%. How much should Static's stock sell for
today?
A) $30.05
B) $20.00
C) $40.00
D) $28.69
A
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A. 13 B. 14 C. 15 D. 16 E. 17