Yesterday GAK inc. paid an annual dividend of $$5$ per share. GAK, inc. plans to reduce their dividend by $2\%$ per year for the next $10$ years. After $10$ years GAK anticipates positive dividend growth rates of $3\%$ per year thereafter. The appropriate discount rate is $14\%$ per year.

How much would you be willing to pay for GAK construction?

Question $1$

How much would you be willing to pay for GAK construction?

Question $2$

How much would you be willing to pay for GAK construction if dividend growth in the short run is actually $+2\%$ per year, with no other changes in assumptions? Does your answer make sense compared to your answer for question $1?$ What can you conclude about the relationship between growth rate and firm value?