P0 = [{D0 * (1 + g1)} / (1 + r)] + [{D0 * (1 + g1)2} / (1 + r)2] + [P2 / (1 + r)2]
= [{$1 * (1 + 0.20)} / (1 + 0.10)] + [{$1 * (1 + 0.20)2} / (1 + 0.10)2] + [$77.76 / (1 + 0.10)2]
= $1.09 + $1.19 + $64.26 = $66.55
Hence, Option "D" is correct.
1 Points Question 16 of 20 ABC is a fast growing company that paid a dividend...
1 Points Question 15 of 20 A fast growing company paid a dividend this year of $1, which is expected to grow at 20 % for two years. Afterwards, the growth rate will be 8 %. If the required is 12 %, what is the value of this stock at the end of the second year (i.e. P2)? A. $23.21 B.530.82 OC.$38.88 D. $52.32
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