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Question 2 Company XYZ just paid a dividend of $ 2 per share. The dividend is expected to grow at a constant rate of 5

Question 2 Company XYZ just paid a dividend of $2 per share. The dividend is expected
to grow at a constant rate of 5% per year indefinitely. If the required rate of return for
investors is 10%, what is the current value of the stock using the Gordon Growth Model?
Question 3 Based on Question 2, suppose that company XYZ declares that its new Eu-
ropean plant is under construction and will increase the company's sales growth in 5 years.
You therefore revise your expectation about XYZ's dividend growth rate. That is, it will be
6% annually starting from 2029. What is the new current value of the stock?
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