Hunter Petroleum Corporation paid a $$2$ dividend last year. The dividend is expected to grow at a constant rate of $5$ percent forever. The required rate of return is $12$ percent $($this will also serve as the discount rate in this problem$).$ Use Appendix B$.$

a$.$ Compute the anticipated value of the dividends for the next three years. $($Do not round intermediate calculations. Round the final answer to $3$ decimal places.$)$

Anticipated

value

D$1$ $

D$2$ $

D$3$ $

b$.$ Calculate the present value of each of the anticipated dividends at a discount rate of $12$ percent. $($Round $"$PV Factor" to $3$ decimal places. Round intermediate calculations to $3$ decimal places. Round the final answers to $3$ decimal places.$)$

PV of

dividends

D$1$ $

D$2$

D$3$

Total $

c$.$ Compute the price of the stock at the end of the third year $($P$3).($Round $"$PV Factor" to $3$ decimal places. Round intermediate calculations to $2$ decimal places. Round the final answer to $2$ decimal places.$)$

P$3$

$=$

D$4$

Ke $$ g

$($D$4$ is equal to D$3$ times $1\mathrm{.}05)$

Price of the stock $

d$.$ Calculate the present value of the year $3$ stock price at a discount rate of $12$ percent. $($Round $"$PV Factor" to $3$ decimal places. Do not round intermediate calculations. Round the final answer to $3$ decimal places.$)$

Price of the stock $($discounted$)$ $

e$.$ Compute the current value of the stock. $($Round $"$PV Factor" to $3$ decimal places. Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

Current value $

f$.$ Use formula given below to show that it will provide approximately the same answer as part e$.($Round the final answer to $2$ decimal places.$)$

P$0$

$=$

D$1$

Ke $$ g

For formula $108,$ use D$1=$ $$2\mathrm{.}10,$ Ke $=12$ percent, and g $=5$ percent. $($The slight difference between the answers to parts e and f is due to rounding.$)$

Current value $