Martin Office Supplies paid a $$6$ dividend last year. The dividend is expected to grow at a constant rate of $8$ percent over the next four years. The required rate of return is $14$ percent $($this will also serve as the discount rate in this problem$).$

The anticipated value of the dividends for the next four years. D$1=6\mathrm{.}48,$ D$2=6\mathrm{.}99,$ D$3=7\mathrm{.}55,$ D$4=8\mathrm{.}15$

b$.$ Calculate the present value of each of the anticipated dividends at a discount rate of $14$ percent. $($Do not round intermediate calculations. Round your final answers to $2$ decimal places.$)$

c$.$ Compute the price of the stock at the end of the fourth year $($P$4).($Do not round intermediate calculations. Round your final answer to $2$ decimal places.$)$

d$.$ Calculate the present value of the year $4$ stock price at a discount rate of $14$ percent. $($Do not round intermediate calculations. Round your final answer to $2$ decimal places.$)$

e$.$ Compute the current value of the stock. $($Do not round intermediate calculations. Round your final answer to $2$ decimal places.$)$f$.$ Use the formula given below to show that it will provide approximately the same answer as part e$.($Do not round intermediate calculations. Round your final answer to $2$ decimal places.$)$

P$0=$ D$1/($Ke $$ g$)$

g$.$ If current EPS were equal to $$8\mathrm{.}25$ and the P$/$E ratio is $32\%$ higher than the industry average of $10,$ what would the stock price be$?($Do not round intermediate calculations. Round your final answer to $2$ decimal places.$)$

h$.$ By what dollar amount is the stock price in part g different from the stock price in part f$?($Do not round intermediate calculations. Round your final answer to $2$ decimal places.$)$

i$.$ With regard to the stock price in part f$,$ indicate which direction it would move if:

$(1)$ D$1$ increases; $(2)$Ke increases; $(3)$ g increases

ChatGPT

Let's go through each part of the problem step$-$by$-$step: