The revenue of a firm is highly likely to be affected by business cycles. The CFO of Company ABC decides to have a dividend policy that is coordinating to business cycles. Specifically, the company will give more dividend when the economy is in the growing stage and less dividend when the economy is in recession. At the moment, the CFO thinks we will have business cycles in every 10 years. After careful thoughts, the CFO comes up with the following dividend payout plan:

????t=2sin(????t/5)+10

where????????is the dividend payment at year????,????= 3.1415926, andsin (?)is the sine

5function. The required rate of return????????=10%.

After 20 years, you expect that the company's share price is going to be 100. Compute the current price of this stock. (Information regarding this question is in the screenshot below)

Challenging Questions {30 marks). The revenue of a rm is highly likely to be affected by business cycles. The CFO of Company ABC decides to have a dividend policy that is coordinating to business cycles. Specically, the company will give more dividend when the economy is in the growing stage and less dividend when the economy is in recession. At the moment, the CFO thinks we will have business cycles in every 10 years. After careil thoughts, the CFO comes up with the following dividend payout plan: 5 where D, is the dividend payment at year t, rr = 3.1415926, and sin (-) is the sine function. The required rate of return 1' =10%. 1ft D, = 2 x sin() + 10