MacLean Inc.currently pays no dividends.Today,the firm announced that it will pay its first dividend of $1 per share in four years,then $1.50 in each of the following three years,and the subsequent dividends are expected to grow at a constant rate of 5 percent per year.What is the stock price today if the risk-free rate is 4 percent and the risk premium associated with this stock is 6 percent?

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Compute 11ea8229_3495_972b_bbd8_31db36c308cb_TB1726_11 then P₀ = ($1+$1.5*PVAF(10%,3))/(1+10%)⁴+[$1.5*(1+5%)/(10%-5%)]/(1+10%)⁷ = $19.40