Both questions

Q1. You decide to hold a stock for three years. The dividends you collect at end of year 1, year 2, year 3 are $3, $4, $5 respectively. At the end of year 3, after collecting the $5, you will be able to sell the stock for $10. Suppose your required rate of return (or the discount rate) is 6%, how much are you willing to pay for this stock today? a) Use a formula approach to compute. b) Use a financial calculator to compute. Show the button you push and the values you assign to these buttons. Hint: See lecture PPT Chapter7Part1, Three- Period Example Q2. What is the value of a stock that is expected to pay a constant dividend of $2 per year if the required return is 15%? Hint: See lecture PPT Chapter7Part1, Zero Growth