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Mr. Smith, who is the financial manager of the Azusa Capital, Inc., expects dividends of $2.20, $2.50,
$3.10, $3.90, $4.50, per year and then constant growth of 4% forever. Investors require a 15%
expected return. P5 is our terminal value, (which is a middle point between two stock valuation
models.) What is this terminal value (a middle point) ?

A. $18.45
B. $29.56
C. $37.41
D. $42.55
E. $49.97



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