Dilbert Conglomerated has just gone public. Over the first year, dividends are expected

to grow $18\%.$ The next two years after that, dividend growth will be $12\%.$ Finally,

dividend growth will settle into a rate of growth of $10\%$ from then on$.$ Assume the company

just paid a dividend of $$1\mathrm{.}00.$

$($a$)$ If investors require a rate of return of $14\%,$ how much should you pay for this

stock?

$($b$)$ Assume the required rate of return continues to be $14\%.$ If you buy the stock at

the price found in part$($a$)$ above, and sell it after $3$ years, what is your realized

rate of return if you just put your dividends under your mattress as you get them?