Hunter Petroleum Corporation paid a $7 dividend last year. The dividend is expected to grow at a constant rate of 5 percent forever The required rate of return is 13 percent (this will also serve as the discount rate in this problem). (Use a Financial calculator to arrive at the answers.) a. Compute the anticipated value of the dividends for the next three years (Do not round intermediato caiculations. Round the final answer to 3 decimal places.) b. Calculate the present value of each of the anticipated dividends ot a discount rate of 13 percent (Do not round intermediate calculations. Round the final answers to 3 decimal places.) b. Calculate the present value of each of the anticipated dividends at a discount rate of 13 percent (Do not round intermediate calculations. Round the final answers to 3 decimal places.) c. Compute the price of the stock at the end of the third year (P) (Do not round intermediate calculations. Round the final answer to 2 decimal places.) P3=KegD4 (D4 is equal to D3 times 1.05) c. Compute the price of the stock at the end of the third year (P3). (Do not round intermediate calculations. Round the final answer to 2 decimal places.) P3=KegD4 (D D4 is equal to D3 times 1.05) Price of the stock \$ d. Calculate the present value of the year 3 stock price at a discount rate of 13 percent. (Do not round intermediate calculations. Round the final answer to 3 decimal placesi) Price of the stock (discounted) e. Compute the current value of the stock. (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 ariswer as part e (Do not round intermediate calculations. Round the final answer to 2 decimal places.) 1. Caiculate the present value of the year 3 stock price at a discount rate of 13 percent. (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. (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 (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Pe=KeD1 For formula 10-8, use D1=3735,Ke=13 percent, and g=5 percent. (The alight difference between the answers to parts e and fis due to rounding) Current value
