Value of one share of fast wheels stock

Question

Problem:

Fast Wheels, Inc. expects to pay an annual dividend of $0.72 next year. Dividends have been growing at a compound annual rate of 6% and are expected to continue growing at that rate.

Requirement:

Question: What is the value of one share of Fast Wheels stock to an investor who requires a 14% rate of return?

• $8.16
• $9.54
• $5.14
• $9.00

Note: Show supporting computations in good form.