Problem $8-19$ P$/$E Model and Cash Flow Valuation $($LG$8-5,$ LG$8-7)$

Suppose that a firm's recent earnings per share and dividend per share are $$3\mathrm{.}90$ and $$2\mathrm{.}90,$ respectively. Both are expected to grow at $7$ percent. However, the firm's current P$/$E ratio of $20$ seems high for this growth rate. The P$/$E ratio is expected to fall to $16$ within five years.

Compute the dividends over the next five years.

Compute the value of this stock in five years.

Calculate the present value of these cash flows using a $9$ percent discount rate.

Complete this question by entering your answers in the tabs below.

Present value

Compute the dividends over the next five years.

Note: Do not round intermediate calculations. Round your answers to $3$ decimal places.

$\backslash$table$[[$Years$,$Dividends$],[$First year,$],[$Second year,$],[$Third year,$],[$Fourth year,$],[$Fifth year,$]]$