Phoenix Corporation has pulled off a miraculous recovery. Four years ago it was near bankruptcy. Now it is making excellent progress.

Phoenix has just announced a 1 per share dividend, the first since the crisis hit. Analysts expect an increase to a 'normal' 3 dividend as the company completes its recovery over the next three years. After that, dividend growth is expected to settle down to a moderate long-term growth rate of 6%.

Phoenix stock is selling at 50 per share. What is the expected long-run rate of return from buying the stock at this price? Assume dividends of 1, 2 and 3 for years 1, 2 and 3. A little trial and error will be necessary to find r.