Arapiles Ltd paid a dividend of $1 yesterday. The firm is expected to increase this dividend by 12 percent each year for 5 years and from then onward, maintain a steady dividend increase of 4 percent. The firm's cost of equity is 14 percent.

1. What is the value of Arapiles Ltd today?

2. What capital gains yield is predicted if you buy and hold an Arapiles Ltd share for one year starting from today?
3. What capital gains yield would you predict if you bought an Arapiles share at the start of the 6^th year and sold it at the end of the 6^th year?