Expected to affect any other future dividends

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Balloons Inc normally pays a quarterly dividend. The last such dividend paid was $1.10, all future quarterly dividends are expected to grow at 6 percent, and the firm faces a required rate of return on equity of 15 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $2.30 per share that is not expected to affect any other future dividends, what should the stock price be?

A) 13.80 B) 12.62 C) 13.95 D) 12.96

Reference no: EM131567921

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