A stock currently pays a dividend of $1 this year. Expected dividend growth is 10% g1 for the next five years and 4% (g2) thereafter for an indefinite amount of time. Assume that the appropriate required rate of return is 9%.

a. Draw a timeline showing the two-stage cash flows of the stock above.

b.What is the present value of the dividends growing at the constant rate g2 of 4% per year forever?

C.What is the value today of a share of this stock?