Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of $3.50 yesterday. Bahnsen's dividend is expected to grow at 4% 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%.

Find the expected dividend for each of the next 3 years; that is, calculate D1, D2, and D3. Note that D0 = $3.50. Do not round intermediate calculations. Round your answers to the nearest cent.

D1 = $ 3.64

D2 = $ 3.78

D3 = $ 3.93

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.

$ = ?

You expect the price of the stock 3 years from now to be $68.24; that is, you expect to equal $68.24. Discounted at a 10% rate, what is the present value of this expected future stock price? In other words, calculate the PV of $68.24. Do not round intermediate calculations. Round your answer to the nearest cent.

$ ?

If you plan to buy the stock, hold it for 3 years, and then sell it for $68.24, what is the most you should pay for it today? Do not round intermediate calculations. Round your answer to the nearest cent.

$

Use equation below to calculate the present value of this stock.

Assume that g = 4% and that it is constant. Do not round intermediate calculations. Round your answer to the nearest cent.

$

P0=rSgD0(1+g)=rSgD1