Explanation

Using the forward pricing formula with discrete dividends:

F = [S₀ - PV(Dividends)] × (1 + r)^T

Given:

• S₀ = $10,000
• Dividend = $300 in 6 months (0.5 years)
• r = 2% annual compounding
• T = 1 year

Step 1: Calculate present value of dividend PV(Dividend) = $300 / (1 + 0.02)^0.5 = $300 / 1.00995 ≈ $297.04

Step 2: Calculate adjusted spot price S₀ - PV(Dividends) = $10,000 - $297.04 = $9,702.96

Step 3: Calculate forward price F = $9,702.96 × (1 + 0.02)^1 = $9,702.96 × 1.02 = $9,897.02

Therefore, the equilibrium 1-year forward price is closest to $9,897 (Option A).

This makes sense because the dividend payment reduces the forward price compared to a non-dividend paying stock.