David has just bought ordinary shares of ABC Pty Ltd. The company expects to

grow at the following rates for the next 3 years: 30 per cent, 25 per cent, and 15 per cent.

Last year the company paid a dividend of $2.50. Assume a required rate of return of 10

per cent. Calculate the expected dividends for the next 3 years and also the present value

of these dividends. (2 Marks for correct identification of each variables for the calculation,

7 Marks for correct workings and 1 Mark for correct answer to equal a total of 10 Marks).