Intro

A stock just paid an annual dividend of $$1\mathrm{.}4.$ The dividend is expected to grow by

$10\%$ per year for the next $4$ years. The growth rate of dividends will then fall

steadily by $1\mathrm{.}5\%$ per year, from $10\%$ in year $4$ to $4\%$ in year $8$ and stay at that level

forever.

The required rate of return is $12\%.$

Part $1$

Attempt $\frac{1}{10}$ for $10$ pts$.$

What is the expected dividend in $8$ years?

Part $2$

Attempt $\frac{1}{10}$ for $10$ pts$.$

What is the value of the stock in $8$ years?

Part $3$

Attempt $\frac{1}{10}$ for $10$ pts$.$

What is the value of the stock now?