The Brown Company just announced that it will be increasing its annual dividend to $1.68 next year and that future dividends will be increased by 2.5% annually. How much would you be willing to pay for one share of the Brown Company stock if you require a 12% rate of return?

A) $14.35
B) $14.63
C) $17.68
D) $18.13
E) $19.81

Annual Dividend

The total amount of dividend payments a company declares in one year, divided amongst its shareholders.

Rate of Return

The positive or negative financial outcome of an investment for a specified time, presented as a percentage of the investment's initial investment.

Dividends Increased

A situation in which a company raises the amount of money paid to shareholders as dividends, often indicating the company's solid financial health.