Calculate the present value today of dividends for year

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Consider a firm that has just paid a dividend of $2.An analyst expects dividends to grow at a rate of 8% per year for the next five years.After that dividends are expected to grow at a normal rate of 5% per year .Assume that the appropriate discount rate is 7%.

Question 1: Calulate the dividends for years 1,2 and 3.

Question 2: What is the price of the stock in year 5?

Question 3: Calculate the present value today of dividends for year 1 to 5.

Question 4: What is the price of the stock today.

Reference no: EM132544319

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