your broker offers to sell you some shares of bahnsen & Co.common stock that paid a dividend of $2 yesterday. you expect the dividend to grow at the rate of 5% per year for the next 3 years and , if you buy the stock , you plan to hold it for 3 year and then sell it.
A. Find the expected dividend for each of the next 3 years; that is, calculate D1,D2,D0
B. Given that the appropriate discount rate is 12% and that the first of these dividend payments will occur 1 year from now, find the present value of the dividend stream; that is , calculate the PV of D1,D2 ,D33 and then sum these PVs
C. you expect the price of the stock 3 years form now to be $34.73; that is ,you expect P3 to equal 34.73. discounted at a 12% rate, what is the present value of this expected future stock price? In other words, calculate the PV of 34