Problem One (20 marks) You are an analyst in charge of valuing common stocks. You have been asked to value two stocks. The first stock AB Inc. just paid a dividend of $1.50. The dividend is expected to increase by 40%, 30%, 20%, 15% and 10% per year respectively in the next five years. Thereafter the dividend will increase by 5% per year in perpetuity. The second stock is CD Inc. CD will pay its first dividend of $5 in 4 years. The dividend will increase by 20% per year for the following 2 years after its first dividend payment. Thereafter the dividend will increase by 5% per year in perpetuity. Both stocks have a required rate of return of 30% per year for the next 2 years, and thereafter the required rate of return will be 15%. a Calculate AB's expected dividend for t = 1, 2, 3, 4, 5 and 6. What is the current price of AB? C) Calculate CD's expected dividend for t = 1, 2, 3, 4, 5, 6 and 7. d) What is the current price of CD