Using two-stage pricing:

HSP

Consider the following information.

• The firms dividends are expected to grow at g = 15% until t = 3 yrs.
• At the start of year four, growth slows to gs= 5%.
• The stock just paid a dividend Div0 = $1.00
• Assume a market capitalization rate of k = 10%

1. How much is the 3rd year dividend? A. 1.459, B. 1.521, C. 1.322, D. 1.253

2. What is the price at the end of the 3rd year? A. 31.72, B. 39.14, C. 32.85, D. 31.94

3. What is the current price or the (PO) A. 28.29, B. 29.17, C 26.78, D. 27.28