Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm projects growth of 20% per year for 4 years. By then, other firms will have copycat technology, competition will drive profit margins, and the sustainable growh rate will fall to 5%. The most recent annual dividend was DIV_{0 =} $1 per share.

a) What are the expected values of DIV₁, DIV₂, DIV₃, and DIV₄.

b) What is the expected stock prive four years from the now? The discount is 10%.

c) What is the stock price today?

d) Find the dividend yield, DIV₁/P₀

e) What will next year's stock price, P₁, be?

f) What is the expected rate of return to an investor who buys the stock now and sells it in one year?