Charlie Is Valuing a Common Stock with Forecast Dividends as Shown

Charlie is valuing a common stock with forecast dividends as shown below. He thinks that 10% is an appropriate discount rate. What is the most he should pay for the stock? $$\begin{array} { | c | c | c | c | c | } \hline \mathbf { D } _ { \mathbf { 1 } } & \mathbf { D } _ { \mathbf { 2 } } & \mathbf { D } _ { \mathbf { 1 } } & \mathbf { D } _ { \mathbf { 4 } } & \text { Later } \\\hline \$ 2.00 & \$ 2.40 & \$ 2.76 & \$ 3.17 & \mathbf { 6 \% } \text { prowth } \\\hline\end{array}$$

A) $60.20
B) $63.25
C) $65.42
D) $84.01

Correct Answer:

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