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Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of $1.50 yesterday. Bahnsen's dividend is expected

image text in transcribed Your broker offers to sell you some shares of Bahnsen \& Co. common stock that paid a dividend of $1.50 yesterday. Bahnsen's dividend is expected to grow at 8% per year for the next 3 years. If you buy the stock, you plan to hold it for 3 years and then sell it. The appropriate discount rate is 10%. a. Find the expected dividend for each of the next 3 years; that is, calculate D1,D2, and D3. Note that D0=$1.50. Do not round intermediate calculations. Round your answers to the nearest cent. D1=$D2=$D3=$ b. Given that the first dividend payment will occur 1 year from now, find the present value of the dividend stream; that is, calculate the PVs of D1,D2, and D3, and then sum these PVs. Do not round intermediate calculations. Round your answer to the nearest cent. $ c. You expect the price of the stock 3 years from now to be $102.04; that is, you expect P3 to equal $102.04. Discounted at a 10% rate, what is the present value of this expected future stock price? In other words, calculate the PV of $102.04. Do not round intermediate calculations. Round your answer to the nearest cent. $ d. If you plan to buy the stock, hold it for 3 years, and then sell it for $102.04, what is the most you should pay for it today? Do not round intermediate calculations. Round your answer to the nearest cent. $ e. Use equation below to calculate the present value of this stock. P0=rSgD0(1+g)=rsgD1 Assume that g=8% and that it is constant. Do not round intermediate calculations. Round your answer to the nearest cent

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