Truth, Inc. recently paid $1.00 as an annual dividend.(i.e., D0 = $1.00) Dividens at T=1,2 are expected to be $1.50, $2.00 respectively. After that future dividends are projected at super-nomal growth rate of 30% over the next 10 years.(t3~t12). After that, the dividend is expected to stabilize at a growth rate of by 2%. Assume that your desired rate of return is 6%?

1. What is the dividend at t13.

2. What is the ex-dividend price of the stock at t=12?

[Note that P(t=12, ex-div) is ths present value of D(t=13) ~ D(t=infinity)]

3. What is the PV(at t=0) of D3 to D12.

4. What is the ex-dividend price of the stock at t=0? [(Note that P(at t=0) is the PV of future dividends from that time on, i.e., PV of D1 to D(). So, PV(D1~D())

= PV(D1~D2) + PV(D3~D12) + PV((D13~D())