1a. Calculate the value of the stock today:

1. Calculate the PV of the dividends paid during the supernatural growth period:

$ % $

D1= 1.15 x 1.15 = 1.3225

D2= $1.32 x 1.15 = 1.5209

D3= 1.5209 x 1.13 = 1.7186

PV of Dividends = + + = $

2. Find the PV of Turbo's stock price at the end of Year 3:

P3^ = ____D4____ = ___D3(1+g)______

rs-g rs-g = =

PV of P3^ = = $