Don't use EXCEL Truth, Inc. recently paid $1.00 as an annual dividend.(i.e., D0 = $1.00) Dividends at T=1,2 are expected to be $2.00, $3.00 respectively. After that future dividends are projected at super-nomal growth rate of 50% over the next 20 years.(t2~t22). After that, the dividend is expected to stabilize at a growth rate of by 2%. Assume your desired rate of return is 6%.

1. What is the dividend at t23.

2. What is the ex-dividend price of the stock at t=22?

[Note that P(t=12, ex-div) is the present value of D(t=23) ~ D(t=infinity)]

3. What is the PV(at t=0) of D2 to D22.

4. What is the ex-dividend price of the stock at t=0? [(Note that P(at t=0) is the PV of future dividends from that time on, i.e., PV of D1 to D().

So, PV(D1~D()) = PV(D1) + PV(D2~D22) + PV((D23~D()) ]