1. Amazin just announced that it will begin paying dividends next year! It expects to pay a $4.75 annual dividend in exactly one year. Dividends are expected to grow at 15% annually for the next 5 years followed by a 7% constant annual growth rate in years 6 to infinity. Investors require a return of 12%. What is the current price for Amazins stock? (note that to answer this question you should follow the steps in the questions below).

1. What is D1?

2. What are the dividends for the initial growth rate (until growth levels off)?

3. What is the price of the stock from years 6 to infinity? Note that we would have to find the price at the end of year 5.

4. What is the PV of the stocks cash flows (year 15 dividends and year 5 stock price)?

5. What is Amazins current stock price?