The Superduper Cup Corp just paid a cash dividend of $2 per share. Investors require a 16% rate of return from investments such as this stock.

a. If the dividend is expected to grow at a steady 8 % per year, what is the current value of the stock (Po)?

b. What will the stock be worth in five years (What is P5)?

c. If the dividend is expected to grow at a steady 10% per year, what is the current value of the stock (Po)?

d. What does this question tell you about the relationship between the growth rate of the dividend of a stock and the value of a share of the stock - all other things constant?