Question 94 

Billie Blake is interested in a stock that has an expected dividend one year from today of $2.00, i.e., D1 = $2.00, D2 = $2.25 and D3 = 2.50. She expects to sell the stock for $38.00 at the end of year 3. The price is Billie will be willing to pay one year from today if investors require a 12% return on the stock is closest to: 

A) $34.30.

B) $29.50.

C) $32.40.

D) $33.05.

我用计算器cash flow的做法答案是C. 但是后面的正确答案是a. 正确答案的解释如下：

Answer 94 

The correct answer was A) $34.30. 

Find the present values of the cash flows and add them together.

N = 1; I/Y = 12; FV = 2.25; compute PV = 2.01.

N = 2; I/Y = 12; FV = 2.50; compute PV = 1.99.

N = 2; I/Y = 12; FV = 38.00; compute PV = 30.29.

Stock Price = $2.01 + $1.99 + $30.29 = $34.29. 

This question tested from Session 14, Reading 60, LOS b, (Part 1)

个人觉得正确答案错了，应为他没有计算第一个2dollar的discounted dividend.