Finance

Simtek currently pays a $2.50 dividend (D 0 ) per share. Next years dividend is expected to be $3 per share. After next year, dividends are expected to increase at a9percentannualratefor3yearsanda6percentannualratethereafter. a. What is the current value of a share of Simtek stock to an investor who requires

a.15 percent return on his or her investment?

b. If the dividend in year 1 is expected to be $3 and the growth rate over the fol- lowing 3 years is expected to be only 7 percent and then 6 percent thereafter, what will the new stock price be?