Exhibit 8.4 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Consider a firm that has just paid a dividend of $1.5. An analyst expects dividends to grow at a rate of 9 percent per year for the next three years. After that dividends are expected to grow at a normal rate of 5 percent per year. Assume that the appropriate discount rate is 7 percent. Refer to Exhibit 8.4. The dividends for years 1, 2, and 3 are

a. $1.5, $2.40, and $3.30.

b. $1.64, $1.78, and $1.94.

c. $1.64, $1.94, and $2.24.

d. $1.5, $2.0, and $2.05.

e. $2.07, $2.14, and $2.21.