Following table is the data of past dividend payments.

dividend (in millions)

2012$1.00

2013$1.50

2014$2.00

2015$2.35

2016$3.15

2017$4.00

2018$4.65

2019$5.25

2020$5.96


Using the past dividend data, you will forecast the future growth rate.

The most recent dividend paid by New Technologies was an annual dividend of $5.96 million in total and there are 20 million shares outstanding .

Assume T-bill rate is 3%, S&P500 market return is 7%, beta of New Technologies is 0.88.

#1.  What is the appropriate discount rate (required rate of return)?
#2. You forecast that future dividends will grow for 3 years at the geometric average of historical dividend growth rate using the data given. What is the geometric average of historical dividend growth rate?
#3. You assume that dividends for the next 3 years will be increased at the rate you just calculated from #2. After that, you assume dividends are expected to increase by 4% each year forever. What should be today's stock price per share?
#4. If the H-model is applied to the above question, at what rate should the growth rate decline each year to reach the constant growth rate of 4%?
#5. Using the H-model, what should be the stock price per share today?