Intro

A stock just paid an annual dividend of $$2\mathrm{.}3.$ The dividend is expected to grow by $6\%$ per year for the next $4$ years. The growth rate of dividends will then fall steadily by $0\mathrm{.}25\%$ per year, from $6\%$ in year $4$ to $5\%$ in year $8$ and stay at that level forever. The required rate of return is $12\%.$

Part $1$

Attempt $\frac{2}{10}$ for $10pts.$

What is the expected dividend in $8$ years?

Part $2$

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?