(STEP BY STEP)

1) XYZ sets a dividend of $2 per share for this year. Investors have an IRR of 16% offered by the market. If the dividend is expected to grow at 8% per year.

a. What is the current value of the stock

b. How much will the stock be worth in 5 years?

c. How much would the share be sold today if the dividend is expected to grow at 20% for the next 3 years and then stabilize at 8% per year?