Nonconstant Dividend Growth Valuation

Conroy Consulting Corporation $($CCC$)$ has a current dividend of $D_0=$$$1\mathrm{.}80.$ Shareholders require a $13\%$ rate of return. Although the dividend has been growing at a rate of

$26\%$ per year in recent years, this growth rate is expected to last only for another $2$ years $(g_{0,1}=g1,2=26\%).$ After Year $2,$ the growth rate will stabilize at gL $=4\%.$

a$.$ What is CCC$\text{'}$s stock worth today? Do not round intermediate calculations. Round your answer to the nearest cent.

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b$.$ What is the expected stock price at Year $1?$ Do not round intermediate calculations. Round your answer to the nearest cent.

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c$.$ What is the Year $1$ expected $(1)$ dividend yield, $(2)$ capital gains yield, and $(3)$ total return? Do not round intermediate calculations. Round your answers to two decimal

places.

Dividend yield:

$\%$

Capital gains yield:

$\%$

Total return:

$\%$

d$.$ What is its expected dividend yield for the second year? The expected capital gains yield? The expected total return? Do not round intermediate calculations. Round your

answers to two decimal places.

Dividend yield:

Capital gains yield: Please use excel to answer the question. $2.$ The current price of a stock is $$16.$ In $6$ months, the price will be either $$19$ or $$11.$ The annual risk$-$free rate is $5\%.$ Find the price of a call option on the stock that has a strike price of $$13$ and that expires in $6$ months. $($Hint: Use daily compounding.$)$ Assume a $365-$day year. Do not round intermediate calculations. Round your answer to the nearest cent.