New-Light, Inc. has just started operations and expects super-normal operating growth in its first two years of operations. Calculate the fair value (approximately) of New-Lights stock, using a 12% discount rate and assuming: (1) the firm does not expect to pay a dividend in years one and two because it needs to conserve cash to fund its rapid growth; (2) in year three, a dividend of $4.10 will be paid; and (3) dividends will then grow at a steady rate of 2% per annum indefinitely.

a.

$17.09

b.

$13.15

c.

$32.68

d.

$16.34

e.

$29.77