1. Now assume that Bon Temps dividend is expected to grow 30% the first year, 20% the second year, 10% the third year, and return to its long-run constant growth rate of 4%. What is the stocks value under these conditions? What are its expected dividends and capital gains yields in Year 1? Year 4?

Year	Dividend	Rate of growth	Amount of %	2.00 x 4% =? 2.00 + (? * years) =
0	$2.00			Dividend 0
1	2.60	30%	0.60	Dividend 1
2	3.12	20%	0.52	Dividend 2
3	3.43	10%	0.31	Dividend 3
4	3.48	4%	0.14	Dividend 4

2. Suppose Bon Temps is expected to experience zero growth during the 1^st 3 years and then resume its steady-state growth of 4% in the fourth year. What would be the value then? What would be its expected dividend and capital gains yields on Year 1? Year 4?

3. Finally, assume that Bon Temps earnings and dividends are expected to decline at a constant rate of 4% per year, that is g = - 4%. Why would anyone be willing to buy such a stock, and at what price should it sell? What would be its dividend and capital gains yields in each year?