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The dividends that a firm pays to its stockholders are expected to grow at 3% per quarter for the next four quarters

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The dividends that a firm pays to its stockholders are expected to grow at 3% per quarter for the next four quarters. From t=4 onwards, i.e. from the beginning of the

fifth quarter the growth rate in dividends will drop to 1.5% per quarter, and the firm

expects to be able to sustain it at this level. Assuming that the market capitalization rate is

2.5% per quarter, work out the price of the firm's stock assuming that the dividend

expected to be paid at t=1, i.e., at the end of the first quarter is $2.25.

(b): Rework your answer assuming that gH, the rate at which the dividends are

expected to grow for the first four quarters is 2.5% per quarter.