# Babbalu Inc. just paid a dividend of $1 per share. Babbalu expects to increase its annual dividend by 20% per year for the next two years and by 15% per year for the following two years. Starting in year 5, Babbalu is expects to pay a constant annual dividend of$3 a share. What is the current value of this stock if the required rate of return is 12%? $17.71$18.97 $20.50$21.08

Question

Babbalu Inc. just paid a dividend of $1 per share. Babbalu expects to increase its annual dividend by 20% per year for the next two years and by 15% per year for the following two years. Starting in year 5, Babbalu is expects to pay a constant annual dividend of$3 a share. What is the current value of this stock if the required rate of return is 12%?

$17.71$18.97
$20.50$21.08