Suppose that a firms recent earnings per share and dividend per share are $3.60 and $2.60, respectively. Both are expected to grow at 8 percent. However, the firms current P/E ratio of 17 seems high for this growth rate. The P/E ratio is expected to fall to 13 within five years.

a) Compute the dividends over the next five years. (Do not round intermediate calculations and round your final answers to 3 decimal places.)

b) Compute the value of this stock in five years. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

c) Calculate the present value of these cash flows using a 10 percent discount rate. (Do not round intermediate calculations and round your final answer to 2 decimal places.)