Brigand Company just paid an annual cash dividend of $2 per share. Investors demand a return of 16% for this type of investment. If we predict that the dividend growth rate will be 8% per year.

has. What is the current value of the stock?

b. What will the stock be worth in five years?

vs. What will the stock price be today if the dividend is expected to increase at a rate of 20% per year for the next three years and then settle at 8% per year, indefinitely?