Integrated Potato Chips paid a $5 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 5 percent per year.

a. What is the expected dividend in each of the next 3 years? (1 mark)

b. If the discount rate for the stock is 10 percent, at what price will the stock sell? (1 mark)

c. What is the expected stock price 4 years from now? (2 marks)

d. If you buy the stock and plan to hold it for 4 years, what payments will you receive? (1 marks)

e. What is the present value of those payments? Compare your answer to (b) and comment. (2 marks)

(Show your workings)