Problem: Please help with the following problem. Provide step by step calculations.
Hastings company's current dividend is $2 per share (D0=$2). The dividend is expected to grow at a constant rate of 9 percent a year for the next 2 years (t=1 and t=2) and it will be 4 percent thereafter (from t=3 to t=infinity). The risk-free rate is 4 percent (kRF=4%), the required rate of return on the market portfolio is 6 percent (km=6%) and the company's beta equals to 1.5.
What is the price of the stock today (t=0)?