5. LMN Incorporated has announced a $3.50 dividend for this year. Analysts project that dividends for LMN will increase by 14% for the next two years and see a dividend increase dropping by 2% per year for the next subsequent five years. Eight years from today, it is anticipated that LMN will reach an annual steady state growth in dividends of 3%. What is the fair market value of LMN when considering the dividend payout of the firm if the discount rate is 11%? DIV, $6.87(1+0.03) $6.87(1.03) (0.11-0.03) (0.08) (r-g) DIV DIV DIV, DIVA DIV DIV DIV, DIV (1+r) (1+r) (1+r) (1+r) (1+r) (1+r)^(1+r)(1+r)*(1+r)* P = + P= + + = + + + = $85.90 $3.50 $3.99 $4.55 $5.09 $5.60 $6.05 $6.42 $6.67 $85.90 P = (1+0.11)' (1+0.11) (1+0.11) (1+0.11) (1+0.11) (1+0.11) (1+0.11) (1+0.11) (1+0.11) P=$3.50+$3.24+$3.33+$3.36+$3.33+$3.24+$3.09+$2.90+$37.27 - $63.24 + + + + P + +