Maxwell Inc. is projecting it will pay the following dividends (assume paid at the end of each year):

Year 1 $16.00

Year 2 $12.00

Year 3 $8.00

Year 4 $4.00

Year 5 $2.00

After the end of year 5 there will be no more oil in its reservoirs. Analysts are predicting the price of crude to grow at 2% per year for perpetuity. If an investor wants a 15% return and the stock is $35.00 should the investor buy the stock?

a) No because the firm is valued at $42.00 and can be bought for $35.00

b) Yes because the firm is valued at $31.53 and can be bought for $35.00

c) None of these answers

d) No because the firm is valued at $31.53 and can be bought for $35.00

e) Yes because the firm is valued at $39.18 and can be brought for $35.00