Horseshoe Stables is losing significant market share and thus its managers have decided to decrease the firm's annual dividend. The last annual dividend was $.86 a share but all future dividends will be decreased by 3.5 percent annually. What is a share of this stock worth today at a required return of 17.8 percent?
A. $3.06
B. $3.90
C. $3.41
D. $3.59
E. $3.95
Answer: B. $3.90
Business
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