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Question 4) A stock is expected to pay a dividend of $0.25 in 1 year, $0.50 in 2 years, and $1.00 in 3 years. Starting
Question 4) A stock is expected to pay a dividend of $0.25 in 1 year, $0.50 in 2 years, and $1.00 in 3 years. Starting with the dividend to be paid 4 years from today, each dividend is expected to be 3% greater than the previous dividend. The dividends will continue forever and each subsequent dividend will be paid exactly one year after the previous dividend. The discount rate applicable to this stock is 13% per year compounded annually. What is the value of one share of this stock? Round all intermediate calculations to 6 decimal points. Your final answer should be within $0.05 of the correct answer choice. 1) $7.85 2) $7.54 3) $8.44 4) $7.62
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