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Find what stock worth if require sixteen percent ror

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Problem 1: Lowell Growth Inc. is a high growth company and expects to use all its earnings in the next five years to fund its growth. At the end of the sixth year, the company will pay a dividend of $4.50 and these dividends will grow at a constant rate of 5% per year thereafter. What is the stock worth if you require 16% rate of return?

A. $19.48
B. $29.48
C. $47.48
D. $38.47
E. $23.98
F. $42.95

Reference no: EM132736490

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