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Suppose Honesty Company has the following expected dividends for the next 5 years: Year 1 2 3 4 8 Expected dividend $2.00 $3.50 $4.60 $5.00

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Suppose Honesty Company has the following expected dividends for the next 5 years: Year 1 2 3 4 8 Expected dividend $2.00 $3.50 $4.60 $5.00 $7.00 The dividend will grow by 10% 4 points after the fifth year. The required rate of return is 10% for the first 2 years, 13% for the next two and 15% onwards. a) What is the price of the stock in 5 years? * Your answer 5 points b) What is the price of the stock today? *

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