In practice, a common way to value a share of stock when a company pays dividends is to

value the dividends over the next five years or so$,$ then find the "terminal" stock price

using a benchmark PE ratio. Suppose a company just paid a dividend of $$1\mathrm{.}30.$ The

dividends are expected to grow at $15$ percent over the next five years. In five years, the

estimated payout ratio will be $45$ percent and a benchmark PE will be $18.$ The required

return is $13$ percent.

a$.$ What is the target stock price in five years?

Note: Do not round intermediate calculations and round your answer to $2$ decimal

places, e$.$g$.,32\mathrm{.}16.$

b$.$ What is the stock price today?

Note: Do not round intermediate calculations and round your answer to $2$ decimal

places, e$.$g$.,32\mathrm{.}16.$