7. Expected dividends as a basisfor stock values A stock's current dividend is $1.00, and dividends are expected to grow at a constant rate of 2.70% per year. The intrinsic value of a stoek 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. Caiculate the pV of the dividend paid today (D0) and the pV of the dividends expected to be paid 10,20 , and 50 years frem now ( D10.Dail. and D so). Assume that the stock's required retum (ry) is 8.40%. Using the grey curve (star symbols), plot the present value of each of the expected future dividends for years 10, 20, and 50 . The resuiting curve will Mustrate how the PV of a particular dividend payment will decrease depending on how 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 plotting it on the graph. (Tool tip: Mouse over the points in the graph to see their coordinates.) Using the grey curve (star symbols), plot the present value of coch of the expected future dividends for years 10, 20, and 50 . The resuiting curve Wii mustrate how the PV of a particutar dividend payment will decrease depending on how far from foday 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 plotting it on the graph. (Tool tip: Mouse over the points in the graph to see their coordinates.)