3. Expected dividends as a basis for The following graph shows the value of a stock's dividends over time. The stock's current dividend is $1.00 per share and dividends are expected to grow at a constant rate of 4S0% per year. The i trisk value of a stock should equal the sum of the present value (PV) of all of the dividends that a stock is supposed to pay in the future, but many people find it difficult to imagine adding up an infinite number of dividends. Calculate the present value (PV) of the dividend paid today (Da) and the discounted value of the dividends expected to be paid 10 and 20 years from now (Dio and Dzo). Assume that the stock's return (ra) is 5.40%. Note: Carry and round the calculations to four decimal Time Period Dividend's Expected Expected Dividend's Future Value Present Value End of Year 10 End of Year 20 End of Year so Using the blue curve (circle symbols), plot the future value of each of the expected future dividends for years 10, 20 far from today the dividend is expected to be received. Note: Round each of the discounted values of the of dividends to the nearest tenth decimal place before platting The resulting curve will lustrate how the PV of a particular dividend payment will increase depending on how on the graph. You can mouse over the points in the graph to see their coordinates. 10.00 Expected Dividends 8.00 Smt FV of 6.00 4.00 2.00 PV of Dividends 0.00 0 10 20 30 40 50 60 YEARS