Bergstresser Corp pays dividends annually. Suppose you forecast that its next dividend will be

$1, and that dividend is one year away. You anticipate that dividend payments per share will

grow at 20 percent per year for the three years after that, and then will settle to a permanent

growth rate of 4 percent per year after the fourth year. The appropriate discount rate for

Bergstresser stock is 10 percent per year and you expect this discount rate to remain constant.

A. What is the price of Bergstresser Corp now? (5 points)

B. What is the current Dividend-to-Price ratio? (please use the upcoming dividend as your

dividend measure to calculate this ratio) (5 points)

C. If all goes according to current expectations, what will the value of Bergstresser Corp be

at the point in the future where you expect that the company will have settled into its

stable growth regime? (5 points)