Assume that you are using the dividend discount model (the Gordon Model) to value stock.The stock currently pays no dividends, but expected to begin paying dividends $4 per share in five years.

Compute the value of a stock paying no dividends today, but that is expected to pay annual dividends of $4 in five years. At that time dividends are expected to grow at a constant rate of 4.5%, and the firm's cost of equity is 11%.