If the present value equation used to calculate the price of a stock you are considering buying is "[$12 / (0.05 - 0.02)]," which of the following is correct, assuming that dividends will grow at a constant rate?
A) The dividend is $12 per share, the dividend growth rate is 5 percent, and the interest rate is 2 percent.
B) The dividend is $12 per share, the dividend growth rate is 2 percent, and the interest rate is 5 percent.
C) The stock price is $12, the dividend growth rate is 5 percent, and the interest rate is 3 percent.
D) The stock price is $12, the dividend growth rate is 2 percent, and the interest rate is 5 percent.
A
Economics
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