B. Consider FI Corporation, whose dividends per share are expected to grow by 10 % per year for the next two years and 3% from then on.

i. If this years year-end dividend is $6.00 and the cost of equity is 9% per year, what must be the current stock price according to the DDM?

ii. If the expected earnings per share are $9.00, what is the implied value of the ROE on future investment opportunities for the next two years?

iii. How much is the market paying per share for growth opportunities?

iv. What happens to the stock price of FI Corp can maintain a 10% growth rate for a third year before falling back to 3%?