Total Return $=$ ke $=$ Dividend Yield $($DY$)+$ Capital Gains Yield $($CGY$)$

$=$ D$1/$P$0+($P$1$ P$0)/$P$0=$ D$1/$P$0+$ g

Estimation of the Growth Rate $($g$)$: g $=$ Retention Ratio $*$ ROE

Question: Consider a company which just paid a dividend D$0($paid today at time $0)$ of $$2\mathrm{.}00$ per share of common stock. Due to a variety of economic circumstances, this company expects to experience growth rates of $6\%,4\%,10\%,$ and $14\%$ over the following four years. After that the company expects the growth rate to be $6\%$ indefinitely. If the compan

a$)$ What is the value of a share of common stock P$0$ today $($at time $0)?$

b$)$ What would you expect the price to be at time $3?($Assume that the dividend at time $2$ has already been paid$)$

c$)$ What are the expected capital gain yield and dividend for the third period

d$)$ What would you expect the price to be at year $10?$