6Cerebra Construction is expanding very fast and expect to grow at a rate of 25 per cent for the next four years. They recently declared a dividend of 3.60 but do not expect to pay any dividends for the next three years. In year 4, they intend to pay a 5 dividend and thereafter grow it at a constant-growth rate of 6 per cent. The required rate of return on such shares is 20 per cent.

a.Calculate the present value of the dividends during the fast growth period.

b.What is the price of the shares at the end of the fast growth period (P₄)?

c.What is the shares price today?

d.Would today's share price be driven by the length of time you intend to hold the shares?