Langley Enterprises pays a constant dividend of $1.30 a share. The company announced today that it will continue to do this for another 2 years after which time it will discontinue paying dividends permanently. What is one share of this stock worth today if the required rate of return is 7 percent?
1. $3.50
2. $2.60
3. $2.35
4. $2.12
5. $3.74