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Price the Stock P 0 P 3 and P 8 for each of the three streams of dividend payouts, discount rate is 10% Year Dividend

Price the Stock P0 P3 and P8 for each of the three streams of dividend payouts, discount rate is 10%

Year

Dividend S1

Dividend S2

Dividend S3

1

$1

$2

$3

2

$1

$5

$3

3

$3

$8

$3

4

$3

$10

10% growth rate

5

$3

$15

10% growth rate

6

$3

10% growth rate

20% growth rate

7

$3

20% growth rate

8

$3

5% growth afterwards

9

$3 (no growth)

P0

P3

P8

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