Company Z$$s earnings and dividends per share are expected to grow indefinitely

by $5\%$ a year. If next year$$s dividend is $$10$ and the market capitalization rate is

$8\%,$ what is the current stock price?

P$0=$ DIV$1/($r $$ g$)$

P$0=$ $$10/(\mathrm{.}08\mathrm{.}05)$

P$0=$$$333\mathrm{.}33$

Page $1$ of $5$

$5.$ Company Z$-$prime is like Z in the above question in all respects save one: Its

growth will stop after year $4.$ In year $5$ and afterward, it will pay out all earningsas

dividends. What is Z$-$prime$$s stock price? Assume next year$$s EPS is $$15$