Presently, Stock A pays a dividend of $1.00 a share, and you expect the dividend to grow rapidly for the next four years at 10 percent. After this initial period of super growth, the rate of increase in the dividend should decline to 3 percent. If you want to earn 8 percent on investments in this common stock, what is the maximum you should pay for this stock? To get your final answer, please solve the following questions.

• What are the dividends for the first four years in future? (1 point)
• What is the estimated price of the stock at the end of year 4? (2 points)
• What is the sum of the present values of first four years dividends? (1 point)
• What is the estimated price of the stock as of today? (2 points)