The Superduper Cup Corporation just paid a cash dividend of $2.00 per share. Investors require a 16% rate of return from investments such as this stock.

1. If the dividend is expected to grow at a steady 8% per year, what is the current value of the stock (Po)?
2. If the dividend is expected to grow at a steady 10% per year, what is the current value of the stock (Po)?
3. What do parts a and b tell you about the relationship between the growth rate of the dividend of a stock and the value of a share of stock - all other things constant?
4. If the dividend is expected to grow at a stead 8% what will the stock be worth in five years? (What is P5)?