The EV Auto Parts Company has just recently been organized. It is expected to experience no growth for the next three years. However, EV will grow at an annual rate of 25% in the fourth year, 15% in the fifth year and beginning in the sixth year should attain a 5% growth rate which it will sustain thereafter. The last dividend paid was $2.00 per share.

a) If EV has a required rate of return of 10%, what is the expected price of the stock today? What is the expected dividend yield in the first year? (16 pts)

b) What is the price of the stock 2 years from now?