Exhibit 8.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Fast Grow Corporation is expecting dividends to grow at a 20 percent rate for the next two years. The corporation just paid a $2 dividend, and the next dividend will be paid one year from now. After two years of rapid growth, dividends are expected to grow at a constant rate of 9 percent forever. Refer to Exhibit 8.5. Assume that the annual dividend grows at a constant rate of 9 percent indefinitely instead of the supernormal growth. How much is the stock worth if dividends grow annually at 9 percent? a. $40.00 b. $47.80 c. $45.60 d. $43.60 e. $52.40 Exhibit 8.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Fast Grow Corporation is expecting dividends to grow at a 20 percent rate for the next two years. The corporation just paid a $2 dividend, and the next dividend will be paid one year from now. After two years of rapid growth, dividends are expected to grow at a constant rate of 9 percent forever. Refer to Exhibit 8.5. Assume that the annual dividend grows at a constant rate of 9 percent indefinitely instead of the supernormal growth. How much is the stock worth if dividends grow annually at 9 percent? a. $40.00 b. $47.80 c. $45.60 d. $43.60 e. $52.40