## Answers

Price=Present value of dividends

here, cost of equity or required return is not given..Assuming it to be r

We see that the price of the stock is given as equal to

=5/(1+r)+5/(1+r)*(1.06/(1+r))+5/(1+r)*(1.06/(1+r))^2+5/(1+r)*(1.06/(1+r))^3+5/(1+r)*(1.06/(1+r))^4+5/(1+r)*(1.06/(1+r))^4*(0.97/(1+r))+5/(1+r)*(1.06/(1+r))^4*(0.97/(1+r))^2+5/(1+r)*(1.06/(1+r))^4*(0.97/(1+r))^3+5/(1+r)*(1.06/(1+r))^4*(0.97/(1+r))^4+5/(1+r)*(1.06/(1+r))^4*(0.97/(1+r))^5+5/(1+r)*(1.06/(1+r))^4*(0.97/(1+r))^5*1.02/(r-2%)

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