A share of stock will pay a $3 dividend in one years time, and dividends are expected to grow at 5% for another 4 years. After that, dividends are expected to grow at 2% per year forever. The fair interest rate to discount the cash flows of the stock is 10% per year.

c) What is the fair value of the share?

d) Suppose you buy 1,000,000 shares of the stock for its fair price today and plan to hold it for two years. What is your expected holding period return? What is the equivalent annualized return?