Assume Fortescue Corporation will pay an annual dividend of $0.50 one year from now. Analysts expect this dividend to grow at 10% per year thereafter until the fifth year. After then, growth will level off at 4% per year. The firms equity cost of capital is 6%. Use the dividend-discount model to answer the following questions.

E. What is the present value of the first five dividend payments?

F. What is the terminal price of Fortescue at time t=5?

G. What is the value of a share of Fortescue stock now? If the firms share price is currently trading at $20, will you sell or buy the shares?