Please show your work and write solutions in details, including formulas and how you plug numbers, given in each question, into these formulas. Please write short verbal conclusion at the end summarizing your answer in words.

The Amazing Video Co. has just paid an annual dividend of 40 cents. You forecast that for the next five years dividends will grow at the rate of 25% a year over the period. From year five on, you expect the growth rate to fall to the industry average of 8% and to remain at this level forever after.

a) Draw the time line showing the dividends per share of this stock for years 1 through 6.

b) If the expected rate of return for this stock is 15%, calculate its price.