Suppose the next dividend for a share of Thompson Inc. is $3.00. You estimate that the growth rate for this stock is 6 percent and the investors require a 12 percent rate of return on the stock. What is the price of the stock?

PacificTelecoms most recent dividend was $1.50 per share (i.e., D0 = $1.50) and the dividend is expected to grow at a rate of 8 percent per year. The rate of return on the market is 14 percent and the risk-free rate is 7 percent. What would be the stock price today if your estimate of the companys beta is 1.2?

Use the information in Question 2 to compute PacificTelecoms expected stock price four years from now?