Garcia Inc

Garcia Inc.has a current dividend of $3.00 per share (D₀ = $3.00) .Analysts expect that the dividend will grow at a rate of 25 percent a year for the next three years,and thereafter it will grow at a constant rate of 10 percent a year.The company's cost of equity capital is estimated to be 15 percent.What is the current stock price of Garcia Inc.?

A) $75.00
B) $88.55
C) $95.42
D) $103.25
E) $110.00

Correct Answer:

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