Do it by hand, please do not use EXCEL or any other software!!

Stock is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 20% a year for five years (years 2 through 6, as the stock recovers from a severe recession) and zero thereafter. If the cost of equity for the stock is 10%, what is the value of this stock?

Hint:

1. Find dividends in each period, given the initial growth rate. ________

2. Calculate P_H in year 6, given the dividend paid in perpetuity in year six and beyond. ________

3. Discount these values to compute the total present value. _______

Do it by hand, please do not use EXCEL or any other software!!