Question: 4. (10 marks) A company will pay a $1 dividend per share in a year's time. The dividend in two years will be $2 per

4. (10 marks) A company will pay a $1 dividend per share in a year's time. The dividend in two years will be $2 per share, and it is expected to grow by 5% per year thereafter. The expected rate of return on the stock is 12% a) What is the current price of the stock? (4 marks) b) What is the expected price of this stock in a year? (3 marks) c) Illustrate that the expected return (12%) is equal to the dividend yield plus capital appreciation

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