Suppose a firm has just paid an annual dividend on its common stock in the amount of $1.77 and that this dividend is expected to increase at 9.16% for each of the next three years, after which the firm is only willing to commit to a 2% annual increase yearly dividends. Given the following information, what would you expect to be the total value of the firm's common equity shares in the market today? To answer this question you MUST first show how you would calculate the value of each share of the firm's common equity using an equational form we've discussed at length in class and then show how you would come up with the market value of the firm's outstanding equity shares. It might be helpful to consider an appropriate discount rate for the firm's common shares and remember that there may be some information provided that is not relevant to the question. Be specific, show the algebra used in ALL of your work, !

2-year CD rate 2.22% Average stock market return 13.41% Beta 1.96 Common shares outstanding 386,000