3. New Chapter Inc. does not expect to initiate dividends for 15 years. At the end of Year 15, the company will start to pay dividends and expects its dividends to grow at 4.5% forever. The company has an 10.5% required rate of return.

i. What is an estimate of the companys stock price at the beginning of the 15th year (the end of 14th year) if its dividend at the end of year 15 is $2.5? [Round your answer to two decimal places.] (1.5 marks)

ii. What is the companys stock price in today's dollars if the desired rate of return is 10.5%? [Hint: use 14 years for the number of periods.] (1.5 marks)

iii. Identify two or more possible reasons that the company does not plan to initiate dividend in the beginning years. Briefly explain. [Note: The discussion must be in your own words. Word limit: 60 words, excluding figures; answers beyond word limit will not be marked.] (1 mark)

b) Low Carbon Ltd has preferred stock with a par value of $50 and an annual $2.5 cumulative dividend. An investor is willing to pay $15 for this preferred stock. What yield or rate of return is this investor seeking for the investment? Show all work and formula(s) clearly. (2 marks)

c) The next dividend payment by Modern Building Ltd will be $1.50 per share. The dividends are anticipated to maintain a growth rate of 5.5% forever. If one Modern Building share currently sells for $35.15, what is the required return? Show all work and formula(s) clearly. (2 marks)