MBA Inc. will pay a dividend for the first time at the end of 2016. It projects the following dividend per share: 2016 $1.50 2017 $2.00 2018 $2.50
Beginning with 2016 dividends will grow at 4% per year. The required rate of return is 12%. The intrinsic value of MBA shares is
A) $25.37.
B) $27.85.
C) $28.96.
D) $38.50.
Answer: B
Business
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