A stock just paid an annual dividend of $2.9. The dividend is expected to grow by 8% per year for the next 4 years. The growth rate of dividends will then fall steadily by 1% per year, from 8% in year 4 to 4% in year 8 and stay at that level forever.

The required rate of return is 12%.

Attempt 1/6 for 5 pts.

Part 1

What is the expected dividend in 8 years?

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Attempt 1/6 for 5 pts.

Part 2

What is the value of the stock in 8 years?

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Attempt 1/6 for 5 pts.

Part 3

What is the value of the stock now?

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