(solution) An annual dividend of $6.00 was just paid by Smart Consulting.

(solution) An annual dividend of $6.00 was just paid by Smart Consulting.

An annual dividend of $6.00 was just paid by Smart Consulting.  The required return on Smart Consulting’s stock is 12.75%.  If the dividends are expected to grow annually at 3.15% at what price should Smart Consulting’s stock be selling according to the discounted dividend model?

a) $62.50

b) $47.06

c) $64.47

d) $48.54