Note: Solutions must be concise and detailed. You are not required to use formulas to answer the questions. It is sufficient to display your calculator solutions, such as PMT=, FV=, PV=, and so on. For example, -100 PV 10 I 2 N FV=? FV = $121

Assume you are intending to buy a common stock that distributed a $1.50 dividend yesterday. This stock is anticipated to rise at a pace of 8% annually for the next three years, then 3% annually forever. If the investors need a 10% return, how much should they pay for this stock right now?