Question $4$: Stock valuation, applying the Dividend$-$Discount Model

You like to invest in so called Dividend Aristocrats. After some analysis you have decided to

invest in the famous dividend paying company Realty Income Corporation. Although they

famously pay dividends every month, they also compute the annualized dividend amount $($you

can find that information here$).$ Assume that you expect Realty Income Corporation to pay an

annual dividend of $$3\mathrm{.}00$ one year from now. You expect this dividend to grow quite fast at $12\%$

per year thereafter until the seventh $(7^{th})$ year. After then, you assume that the growth rate will

level off at more modest $4\%$ per year. According to the dividend$-$discount model, what is the

value of a share of Realty Income Corporation stock if the firm's equity cost of capital is $8\%?$