Sapphire, Inc. will pay an annual dividend of $2.20 next year. The company just announced that future dividends will be increasing by 3.20 percent annually.

1. How much are you willing to pay for one share of this stock if you require a 13.20 percent return?

2. What is the expected price of the share in 4 years time?

3. What is the price of the share today, if the dividends do not grow and remain constant throughout? The required return is still 13.20%