Solve

Example: Assume that CR7 Co. will pay five annual dividends of $2 in year 1, $3 in year 2, $4 in year 3, $5 in year 4 and $5.50 and in year 5. After that, CR7 Co. is expected to grow at a constant growth rate of 3%. Assuming that the required rate of return is 11%, what is the value of the stock today