Question 1 (15 marks) a) Stock A just distributed a dividend of $2. It is expected that the company will increase its dividend by 12% in the coming year, 15% in the second year and 8% in the third year. After the third year, the company will maintain the dividend growth rate at 5% forever. How much would Stock A be worth today if its yearly required rate of return is 8%? (7 marks) b) Suppose you are willing to pay $50 today for a share of stock which you expect to sell in one year for $52. If you require an annual rate of return of 10%, what must be the amount of the annual dividend which you expect to receive at the end of Year 1? (8 marks)