Ceebros Builders is expanding very fast and is expected to grow at a rate of 25 percent for the next four years. The company recently paid a dividend of $3.60 but is not expected to pay any dividends for the next 3 years. In year 4, management expects to pay a $5 dividend and thereafter to increase the dividend at a constant rate of 6 percent. The required rate of return on such stocks is 20 percent. a. Calculate the present value of the dividends during the fast growth period. Do- 814 Required Rate of Return (R) - D- PV_D- D- PV D- D- PV D- PV_D= D PV of Dividends (years 1-4): b. What is the value of the stock at the end of the fast growth period (i.e. Pa)? Hint: Calculate Ds (expected dividend in year 5) and use the constant growth dividend model to estimate P. Constant Growth Rate (g)- Ds= P = c. What is the value of the stock today? Hint: Find the present value of P4 and add this amount to the present value of the first four years of dividends. PV P- Current Price of the Stock (Po) d. Would today's stock value be affected by the length of time you intend to hold the stock? L