The shareholders of Skyline Resorts have just received a dividend of $2.49 per share. Due to recent government restrictions placed on the sector, investors have increased their required rate of return to 9% per annum for common stock investments of this perceived risk level. QA Assuming the market expects dividends of Skyline Resorts to grow at a constant rate of 3% into perpetuity, what is the maximum price you would be willing to pay for this stock today? QB A breaking news article, describing the companys recent surge in demand, advises that investors now expect dividends to increase by 7% per annum for the next two years, and warns that dividends will be suspended in the following year while the firm undergoes strategic restructuring. Dividends are then expected to resume in four years from today when an annual dividend of $4 will be paid. Thereafter annual dividends are expected to grow at a more stable rate of 4% per year into perpetuity.

Given this news, how much would investors now be willing to pay for Skyline Resorts as of today?

QC Keeping in mind the breaking news detailed above, and assuming you purchased Skyline Resorts common stock at the price calculated in Part a, should you still hold the stock in your portfolio given that it is now trading the price calculated in Part b?