Jaja Limited just paid an annual dividend of $2.50 a share. The firm expects to increase this dividend by 8 percent per year for the following 4 years and then decrease the dividend growth to 3 percent annually thereafter. Which one of the following is the correct computation of the dividend for year 8?

1. ($3) (1.08 x 4) (1.03 x 4)

2. ($3) (1.08 x 4) (1.03 x 3)

3. ($3) (1.03)

4. ($3) (1.03)

5. ($3) (1.03)