Consider a company (ABC Company) that has stock and pays dividends. The dividend that the company paid at the end of the previous period was $4.00 per share. The company expects to grow at a long run growth rate of 3%. Please use this information to answer the following questions.

a. What is the value of the next dividend (D1) that the company will pay?

b. If the equity cost of capital is 8%, how much will this stock trade for in the market today?