40. Nonconstant Growth. A company will pay a $2 per share dividend in 1 year. The dividend in 2 years will be $4 per share, and it is expected that dividends will grow at 5% per year thereaf- ter. The expected rate of return on the stock is 12%. (LO2)

a. What is the current price of the stock?b. What is the expected price of the stock in a year?

c. Show that the expected return, 12%, equals dividend yield plus capital appreciation.