ABC Wireless Inc. is expected to pay dividends of $2.00 per share at the end of this year (t=1), $2.16 at the end of next year (t=2), and $2.33 at the end of the third year (t=3). Immediately after ABC pays the $2.33 per share dividend at the end of the third year, you expect ABCs stock to be trading for $25.00 per share. ABCs cost of equity capital is 10%.

a) What is the highest price that you would be willing to pay today for a share of ABC stock if you plan to hold the stock for three years?

b) What is the highest price that you would be willing to pay today for a share of ABC stock if you only plan to hold it for 1 year?

c) At the end of the second year (e.g., at time t=2), immediately before ABC pays the $2.16 per share dividend, at what price would you expect shares of ABCs stock to be trading?