Perry, Inc., paid a dividend of $2.50 yesterday. You are interested in investing in this company, which has forecasted a constant-growth rate of 5.0 percent for its dividends, forever. The required rate of return is 17 percent.

Compute the expected dividends D1, D2, D3, and D4. (Round answers to 3 decimal places, e.g. 15.250.)

D1 $ ?

D2 $ ?

D3 $ ?

D4 $ ?

Compute the present value of these four dividends. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.20.)

Present value of dividends

$

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What is the expected value of the stock four years from now (P₄)? (Round intermediate calculation to 3 decimal places, e.g. 15.250 and round final answer to 2 decimal places, e.g. 15.20.)

Expected value

$

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What is the value of the stock today based on the answers to parts b and c? (Round intermediate calculation and final answer to 2 decimal places, e.g. 15.20.)

Value of stock

$

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Use the equation for constant growth (Equation 8.4) to compute the value of the stock today. (Round answer to 2 decimal places, e.g. 15.20.)

Price of stock

$