An investor is contemplating the purchase of common stock at the beginning of this year and to hold the stock for one year

The investor expects the year-end dividend to be $2.00 and expects a year-end price for the stock of $40. If this investor's required rate of return is 10%, then the value of the stock to this investor is
A) $36.36.
B) $38.18.
C) $33.06.
D) $34.88.

Answer: B