Ms. Manners Catering (MMC) has paid a constant $1.50 per share dividend to its common stockholders for the past 25 years. MMC expects to continue this policy for the next two years, and then begin to increase the dividend at a constant rate equal to 2 percent per year into perpetuity.

Ms. Manners Catering (MMC) has paid a constant $1.50 per share dividend to its
common stockholders for the past 25 years. MMC expects to continue this policy
for the next two years, and then begin to increase the dividend at a constant rate
equal to 2 percent per year into perpetuity. Investors require a 12 percent rate of
return to purchase MMC’s common stock. What is the market value of MMC’s
common stock?
a. $14.73
b. $15.00
c. $15.58
d. $15.30
e. None of the above is correct.




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