Biogenetics, Inc. plans to retain and reinvest all of its earnings for the next 30 years. Beginning in year 31, the firm will begin to pay a $12 per share dividend. The dividend will increase at a 6% rate annually thereafter. Given a required return of 15%, what the stock should sell for today?

A) $1.21
B) $1.64
C) $2.01
D) $4.39
E) $13.45

Required Return

The minimal yearly percentage increase essential to entice investment by individuals or companies into a certain project or security.

Per Share Dividend

The amount of dividend that is paid out for each share of a company's stock.

Dividend Increase

A rise in the amount of money paid to shareholders out of a company's earnings per share.