Explanation

The stock value can be calculated using the formula:

$V_0 = \frac{E_1}{r} + PVGO$

Where:

• $E_1$ = EPS for next year = $4.80
• $r$ = required rate of return = 7% = 0.07
• PVGO = Present value of growth opportunities = $12.50

$V_0 = \frac{4.80}{0.07} + 12.50$ $V_0 = 68.57 + 12.50$ $V_0 = 81.07$

The value is closest to $81, which corresponds to option C.

Answer: C