Common stock valuation Hattie’s Hat Emporium just went public at a price of

$12.90 per share. They do not plan to pay a dividend for the next 3 years but then plan to pay a special one-time dividend of $2.50 to reward their existing shareholders’ loyalty at time 4.

They then plan, beginning at time five, to pay a constant dividend of $.30 for each of the following 5 years. Following that, they plan to increase the dividend by 3 % each year for the rest of time. The firm has a required rate of return of 7.3 %. What should be the current price of a share of stock?