The last dividend that was paid yesterday (D0) on Spirex Corporation's common stock was $8.00, and the expected growth rate is 0 percent. The required rate of return on this stock is 10 percent.

What is the highest price you should be willing to pay for this stock?

$50

$64

$78

$80

$92

B. Suppose the firm's expected growth rate is 5% now, what is the price of the stock?

Assume that the other information remains the same as before,

i.e., D₀ = $8; r_s = 10%.

$100

$120

$133

$150

$168

C. What is the present value of the future growth opportunity represented by the 5% growth rate, compared to 0% growth rate?

$50

$65

$70

$88

$96

D. Still assume the constant growth rate is 5%. What is the stock price at time 1, i.e., one year from today? Assume that the other information remains the same as before,

i.e., D₀ = $8; r_s = 10%.

$105

$126

$139.65

$176.4

$196