The Hobbes Family Inn currently pays a $1 common stock dividend. Dividends have been recently growing at a 10% annual rate and are expected to continue growing at this rate for the next three years. Thereafter the growth rate is expected to be 5% for the foreseeable future. What is the current value of Hobbes Family Inn common stock to an investor requiring a 13% return?

Year Annual Growth Rate Dividend Selling Price Current Value Sum of Dividends

0

1

2

3

4

5

6

7

8

9

10