An analyst gathers the followinginformation about a company:
　　According to the two-stage dividend discount model, the current valueper share of the company’s common stock is closest to:
　　A.    $11.71.
　　B.    $12.86.
　　C.    $19.20.
　　Correct Answer: A
　　Net profit margin = Netearnings/Sales
　　Net earnings = Net profit margin ×Sales
　　Dividends per share (Dn) =(Net earnings × Payout ratio)/Number of outstanding shares;
　　Therefore, D1 = ($80million × 0.16 × 0.50)/10million = $0.64
　　D2 = $0.64(1 + 0.20) = $0.77
　　D3 = $0.64(1 + 0.20)2= $0.92
　　D4 = $0.64(1 + 0.20)2(1 + 0.05) = $0.97