1. Consider a stock that will have dividend growth rates in the next three periods of 17%, 7%, and 4%, respectively. The third growth rate remains forever. The company just paid a dividend, D0,of$1.27. The interest rate is 11%.A.How much are the dividends in periods 1, 2, and 3? (ANSWER ONLY C PLEASE, A WAS ALREADY ANSWERED AS 1.49, 1.59, 1.65 & B WAS 23.57)B.Using 1.65 as the dividend in period 3, what is the price of the stock at time 2? Enter your response below rounded to 2 DECIMAL PLACES. C. Using the correct answers from the previous questions, what is the price in the current period?
2. Fortress of Solitude Co. expects an earnings per share of $1.31 and reinvests 30% of its earnings. Management projects a rate of return of 8% on new projects and investors expect a 8% rate of return on the stock. A. What is the sustainable growth rate? Enter your answer as a percentage. (ANSWER ONLY B PLEASE, A WAS ALREADY ANSWERED AS 2.4 AND B WAS 16.38). B. Given a growth rate of 2.4%, what is the price of the stock with growth? Enter your response below rounded to 2 DECIMAL PLACES. C. What would be the price of the stock with no growth?