Suppose that a firm$s$ recent earnings per share and dividend per share are $$3\mathrm{.}70$ and $$2\mathrm{.}70,$ respectively. Both are expected $to$ grow $at9$ percent. However, the firm$s$ current$\frac{P}{E}$ ratio $of18$ seems high for this growth rate. The$\frac{P}{E}$ ratio $is$ expected $to$ fall $to14$ within five years.

Compute the dividends over the next five years.

Compute the value $of$ this stock $in$ five years.

Calculate the present value $of$ these cash flows using $an11$ percent discount rate.