Decimal places (when relevant): please keep 2 in all calculations. For interest rates, keep 2 digits in the form of 3.xx% unless otherwise specified.

PLEASE SHOW ALL WORK! WITHOUT FINANCIAL CALCULATOR and NO EXCEL

If you are not going to answer all the parts to the question please leave it for someone else. THANKS

4. Birdie Corporation will pay a dividend of $1.4 per share at the end of this year and a

dividend of $1.5 per share next year. You expect Birdie's stock price to be $26.00 in two years. You require a 10% return on your investment.

1. What price would you be willing to pay for a share of Birdie today, if you planned to hold the stock for two years?
2. Suppose instead you plan to hold the stock for one year. For what price would you expect to be able to sell a share of Birdie stock in one year?
3. Given your answer to part b), what price would you be willing to pay for a share of Birdie today, if you planned to hold the stock for one year? How does this price compare to your answer in part a)?