Please clearly write or show all the calculations and steps, please do not use Excel to calculate.

Question 3 (12 marks) (a) Stock A just distributed a dividend of $4. It is expected that the company will increase its dividend by 18% in the coming year, 15% in the second year and 10% in the third year. After the third year, the company will maintain the dividend growth rate at 8% forever. How much would Stock A be worth today if its yearly required rate of return is 15%? (7 marks) (b) Suppose you are willing to pay $30 today for a share of stock which you expect to sell at the end of one year for $32. If you require an annual rate of return of 12 percent, what must be the amount of the annual dividend which you expect to receive at the end of Year 1? [Hint: think of Po=D1 / (R-g)]