Suppose a company currently pays an annual dividend of $2.80 on its common stock in a single annual installment, and management plans on raising this dividend by 6% per year indefinitely.

If the required return on the stock is 12%, what is the current share price?

Now suppose the company actually pays its annual dividend in equal quarterly installments: thus, the company has just paid a dividend of $.70 per share, as it has for the previous three quarters.

What is your value for the current share price now?

(Hint: Find the equivalent annual end-of-year dividend for each year.)

Do you think this model for stock valuation is appropriate?

Please show work with formulas no excel.