Jansen Corp. is experiencing rapid growth. Dividends are expected to grow at 10 percent per yearduring the next three years(t = 1, 2, 3), with the growth rate falling off to a constant 4 percent per year, thereafter. The required return is 10% per year(compounded annually) and the company just paida $2.80 dividend.
a) What is the current priceof the company’s stock?
b) At what price will the company’s stock sell three years from today(at t=3, just beforethe t=3 dividend is paid).