Assume you've generated the following information about the stock of Ben's Banana Splits: The company's latest dividends of $2.05 a share are expected to grow to $2.21 next year, to $2.39 the year after that, and to $2.58 in year 3. After that, you think dividends will grow at a constant 6% rate.
a. Use the variable growth version of the dividend valuation model and a required return of 12% to find the value of the stock.