Consider a firm that has just paid a dividend of $2. An analyst expects dividends to grow at a rate of 8% per year for the next five years. After that dividends are expected to grow at a normal rate of 5% per year. Assume that the appropriate discount rate is 7%.

i.Calculate the dividends for years 1, 2, and 3.(3 Marks)

ii.What is the price of the stock in year 5?(3 Marks)

iii.Calculate the present value today of dividends for years 1 to 5.(3 Marks)iv.What is the price of the stock today (P0)?