Value of this stock today based on the discounted model

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Reference no: EM131185221

ABC tutoring Consultants stock doesn't now pay dividends. Investors expect that it will begin paying a dividend of $2/share in exactly 5 years at time 5. That is, they forecast that D5 will be $2/share. Investors expect that the dividend will then remain at that level of $2/share forever after that. They require a return of 18% on this tock. What is the value of this stock today based on the discounted model?

A $4.86 B $9.42 C $11.11 D $6.76 E $5.73

Please show me the solution steps by steps with formula.

Reference no: EM131185221

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