2.You are considering buying shares in a growth stock that you believe will earn $2 per share next year, $4 in the following year and $6 in the third year (with all earnings paid out as dividends).After year 3, it is expected that earnings (and dividends) will grow at a steady 3% per year.After the three years, your firm is similar to other firms that grow at 3% annually and trade at a PE multiple of 10.

a) If the stock is currently trading at $50 per share, would you recommend a buy or sell?[13 points]

b)If growth was greater than 3% for the stock, would that increase or decrease your desire to buy the stock? [2 points]