BOND AND STOCK VALUATION

EXCEL AND FINANCIAL CALCULATOR ONLY

u. General Lenders announced a dividend of $6.50 per share in one year from today. Afterwards, the company expects that their business won't do too well, and will not pay dividends for 5 years. In 7 years from today, they expect to pay an annual dividend of $2.80 in perpetuity. If you know that the required return is 11.7%, estimate the current price of the stock