1.Trevan currently pays no dividends, choosing instead to re-invest all earnings in the firm.However, the firm anticipates that beginning in year 6, they will run out of profitable investments and begin paying a dividend of $5.00 per share. They anticipate that dividends will grow at 2% per year in perpetuity following that.

The required return on the cash flows of Trevan's dividends is 15% per year.

a)What is the equilibrium value of a share of Trevan today?

b)Assuming that nothing about Trevan's cash flows, or its required return, changes, what should be the equilibrium value of a share of Trevan at t=5?At t=6?