Question: Please present all final answers to two decimals for number (e.g. 1.23) and two decimals for percent (e.g. 1.23%). FULL working must be presented (with

Please present all final answers to two decimals for number (e.g. 1.23) and two decimals for percent (e.g. 1.23%).

FULL working must be presented (with formulas, working stages, and results with units)

Please present all final answers to two decimals for number (e.g. 1.23)

Question 4 (25 marks): A stock currently pays a dividend of $2 this year. Expected dividend growth is 10% (81) for the next five years and 5% (92) thereafter for an indefinite amount of time. Assume that the appropriate required rate of return is 8%. a. Draw a timeline showing the two-stage cash flows of the stock above. (5 marks) b. What is the present value of the dividends growing at the constant rate g2 of 5% per year forever? (10 marks) C. What is the value today of a share of this stock? (10 marks) (Show All workings)

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