Massmay Ham Company produces ham and bacon and is expected to earn $6 per share next year and pay out $1.20 in dividends.  They project 10% dividend growth for the next three years.  Then, dividends will double as they reduce their re-investment rate.  Thereafter, they expect growth of 6%.    Investors require an 8.5% return to invest in Massmay Ham stock. 

 

Part a:  Construct time line of Massmay Ham's dividends that lasts at least 6 years.

Part b:  What is the continuing value as of year 5?

Part c: If markets are efficient, what is the price of Massmay Ham shares today?