Beachmaster Suntan Oils dividend is expected to grow at a 20% rate each of the next 2 years. After that, dividend growth is expected to normalize at about 8.5% annually. Beachmaster just paid a $2.25 annual dividend per share. The require rate of the return of the stock is 10%.

1.Draw the time line of the stocks CFs?

2.What is the forecasted dividend for each of the next 2 years (D1 and D2)?

3.What is the forecasted dividend 3 years from now?

4.At what price do you foresee Beachmasters stock selling 2 years from now (what is your forecasted P2)?

5.What are the present values of D1, D2, and P2?

6.What is your estimated stock price today?