Suppose that a firm$$s recent earnings per share and dividend per share are $$2\mathrm{.}10$ and $$1\mathrm{.}10,$ respectively. Both are expected to grow at $9$ percent. However, the firm$$s current P$/$E ratio of $20$ seems high for this growth rate. The P$/$E ratio is expected to fall to $16$ 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 an $11$ percent discount rate.