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Suppose that a firm's recent earnings per share and dividend per share are $3.60 and $2,60, respectively. Both are expected to grow at 8 percent.

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Suppose that a firm's 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 firm's 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. Compute the dividends over the next five years. (Do not round intermediate calculations. Round your answers to 3 decimal places.) Years Dividends First year Second year Third year Fourth year Fifth year Compute the value of this stock in five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price

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