Day and Associates is experiencing a period of abnormal growth. The last dividend paid by Day was $0.75. Next year, they anticipate growth in dividends and earnings of 25 percent followed by negative 5 percent growth in the second year. The company will level off to a normal growth rate of 8 percent in year three and is expected to maintain an 8 percent growth rate for the foreseeable future. Investors require a 12 percent rate of return on Day.
What is the approximate amount that an investor would be willing to pay today for the two years of abnormal dividends（）
A. $1.55.
B. $1.83.
C. $1.62.
参考答案：A
解析：
First find the abnormal dividends and then discount them back to the present.
$0.75×1.25=$0.9375×0.95=$0.89.
D1=$0.9375; D2=$0.89.
At this point you can use the cash flow keys with CF0=0, CF1=$0.9375 and CF2=$0.89.
Compute for NPV with I/Y=12. NPV =$1.547.
Alternatively, you can put the dividends in as future values, solve for present values and add the two together.