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Assume that the expected future dividends (D) at end of periods 1,2, and 3, as well as the expected future price (P) at end of period 3 for a stock are as follows: D1 = $1.20, D2 = $1.40, D3 = $1.55, and P3 = $80.00. What should be the stock's expected price today, (i.e. P0 )? I encourage you to draw a time line clearly indicating the situation. Assume the required return is 8.6 percent.
a. 87.15
b. 66.96
c. 79.14
d. 65.96
e. 68.40

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