Final answer:
The question is about calculating the present value of a stock using the Dividend Discount Model considering changing growth rates. Specific numerical calculations are not provided, but the approach involves present value calculations for dividends over 35 years and the terminal value using perpetual growth thereon.
Step-by-step explanation:
The student is asking for the present value of Silvio's Steakhouse stock using the Dividend Discount Model (DDM). To solve this, we must calculate the present value of the dividends expected to be paid for the first 35 years with a perpetual growth of 5.8%, and then calculate the continuing value of dividends growing at 5.4% indefinitely after the 35th year. Since the actual calculations and the final answer are not provided in the instruction, the answer options cannot be determined.
However, to proceed with the calculations, one would firstly calculate the present value of each dividend payment using the required rate of return as the discount rate. Then, calculate the present value of all dividends up to the 35th year. Lastly, calculate the stock's terminal value at the end of the 35th year using the Gordon Growth Model with the perpetual growth rate of 5.4%, and then discount this back to present value.
As an actual numerical solution is not provided, the process described would lead to the correct present value of the stock under the DDM, if the necessary computations were carried out.