ABC Pharmaceuticals (ABC) is expected to pay a dividend of $4 per share a year from now (year 1). Dividends are expected to grow at 8% for the two years after year 1, and 3% forever after. The return that investors expect on ABC (i.e., the cost of capital of ABC) is 11.5%.

A) Determine the fundamental value of a stock of ABC (i.e., the fair stock price).

$___

B) What is the expected stock price one year from now (after the dividend has been paid)?

$____

C) If an investor were to purchase the stock today and hold the stock for 1 year, what would be their expected 1-year holding period return (i.e., calculate the 1-year holding period return, which includes the dividend payment)? (Note: Your answer should be a number in percentage form. Do not enter '%'.)

___%

The holding period return (HPR) can be calculated as,

=(End ValueInitial Value)/Initial Value

where the "End Value" includes income such as dividend payments earned on the investment.