Question: 3) In the problem above (question 2); let us assume that investors rather than predicting one growh rate of 15% : predict two different growh

3) In the problem above (question 2); let us assume that investors rather than predicting one growh rate of 15% : predict two different growh rates. It is estimated that the dividends will grow at the rate of 10% in the next three years. Then the growth rate of dividends will accelerate to 20% starting in the fourth year and that growth rate will continue forever in the rest of future years. Given this; how the fundamental price of that stock changes ? (use the values of Question 2 in the answer. Only the growth rate is different in this question) b) Is that stock a good buy at the price of 12.4 per share with that new fundamental price? 22

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