Answer :
The stock price today should be $100. So, the correct option is C. 100 USD.
To determine the stock price today, we can use the Gordon Growth Model, also known as the Dividend Discount Model (DDM):
Stock Price = Dividend / (Required Return on Equity - Growth Rate)
In this case, the dividend for the next two years is $1, and the growth rate of dividends for the next two years is 1%. The required return on equity is 2%, which remains constant.
Using the formula:
Stock Price = $1 / (0.02 - 0.01)
Stock Price = $1 / 0.01
Stock Price = $100
Therefore, the stock price today should be $100. So, the correct option is C. 100 USD.
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