Question $9$

Assume a stock currently pays no dividends today, but expected to begin paying dividends

$$10$ per share in $6$ years. The dividends are expected to have a constant growth rate of $5\%$

at that time and firm has a cost of equity of $14\mathrm{.}6\%.$ Using the dividend discount model,

what do you estimate the share price should be$?$

Question $10$

Suppose we have a firm that is assumed to have a dividend growth rate of $30\%$ for the next

two years, then $8\%$ per year afterward. The cost of equity is assumed to be $14\%.$ Assume

that the stock recently paid a dividend of $$8.$ The Compute the value of the stock.