Using the same logic, compute the dividends, prices, and the present value of each of the dividends at the end of each period.

The dividend yield for period $1$ is

$.$ and it will $.$

each period.

The capital gain yield expected during period $1$ is

and it will

each period.

If it is forecasted that the total return equals $9\mathrm{.}00\%$ for the next $5$ years, what is the forecasted total return out to infinity?

$4\mathrm{.}00\%$

$5\mathrm{.}00\%$

$9\mathrm{.}00\%$

$13\mathrm{.}00\%$

Note that this stock is called a "Hold" as its forecasted intrinsic value is equal to its current price widehat$(P_0)=\frac{D_1}{P_t-9}=\frac{\text{\$}1\mathrm{.}04}{0\mathrm{.}000-0\mathrm{.}0400}=$$$20\mathrm{.}80$ and the

expected total return is equal to the required rate of return $r_s.$ If the market was more optimistic and the growth rate would be $6\mathrm{.}00\%$ rather than

$4\mathrm{.}00\%,$ the stock's forecasted intrinsic value would be widehat$(P_0)=\frac{\text{\$}1\mathrm{.}04}{0\mathrm{.}0000-0\mathrm{.}0000}=$$$34\mathrm{.}67,$ which is greater than $$20\mathrm{.}80.$ In this case, you would call the

stock a "Buy".

Suppose that the growth rate is expected to be $2\mathrm{.}00\%.$ In this case, the stock's forecasted intrinsic value would be

$\_.$ its current

price, and the stock would be a