4. Growth: recent $2 dividend is expected to grow by 6% (representing firm's growth) into the future What is the price of this stock? 5. Variable growth: new product should enable 12% growth for two years, then 8% for two years, thereafter competition will force the firm back to its competitive 3% growth What is the price of this stock? EQUITY VALUATION Based on expected cash flow as represented with dividends: V = D/k or V=D/(kg) or V=S [D!/(1+k)") + [D. :/ /(k-g)W(1+x)" Given rr = 12% . . 3. No growth: dividend has been and expected to remain $2 per year What is the price of this stock? 16.67