Answer: $86.36

## Explanation This is a two-period dividend discount model calculation: \[ P_0 = \frac{D_1}{(1 + r)^1} + \frac{D_2 + P_2}{(1 + r)^2} \] Where: - \( D_1 = \$2.00 \) - \( D_2 = \$2.50 \) - \( P_2 = \$100.00 \) - \( r = 10\% = 0.10 \) \[ P_0 = \frac{2.00}{(1.10)^1} + \frac{2.50 + 100.00}{(1.10)^2} \] \[ P_0 = \frac{2.00}{1.10} + \frac{102.50}{1.21} \] \[ P_0 = 1.8182 + 84.7107 = \$86.53 \] Wait, let me recalculate more precisely: \[ \frac{2.00}{1.10} = 1.81818182 \] \[ \frac{102.50}{1.21} = 84.7107438 \] \[ P_0 = 1.81818182 + 84.7107438 = 86.52892562 \approx \$86.53 \] Actually, looking at the options, $86.36 is option A and $86.53 is option B. Let me check the calculation again: \[ P_0 = \frac{2.00}{1.10} + \frac{2.50}{1.21} + \frac{100.00}{1.21} \] \[ P_0 = 1.81818182 + 2.06611570 + 82.6446281 \] \[ P_0 = 86.52892562 \approx \$86.53 \] This matches option B ($86.53), not option A ($86.36). However, the question says "closest to" and the correct calculation gives $86.53, which is option B.

Author: LeetQuiz Editorial Team