Response to the following problem:
The Alter G Corporation currently pays $3.00 of dividends per share of common stock. The required rate of return on Alter G stock is 5%.
a. If the expected dividend growth rate is 2% per year, forever, what is the value of a share of Alter G common stock?
b. If the expected dividend growth rate is 4% per year, forever, what is the value of a share of AlterG common stock?
c. If the dividend growth rate is expected to be 4% per year of the next four years and 2% thereafter, what is the value of a share of AlterG common stock?