Fin 305 Chapter 8 question 1 A firm is expected to pay a dividend of $2.15 next year and $2.30 the following year.

Compute the value of this stock with a required return of 12.1 percent. (Round your answer to 2 decimal places.)

Calculation of Current value of stock:Expected growth rate of dividend = 2.30 - 2.15 = .15 / 2.15 = 6.98%P0 = 2.15 / 0.121 - 0.0698 = $42P1 = 2.30 / 0.121 - 0.0698 = $44.92P2 = 44.92 x 1.0698 =...