Suppose that a firm’s recent earnings per share and dividend per share are $2.90 and $2.10, respectively. Both are expec

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Suppose that a firm’s recent earnings per share and dividend per
share are $2.90 and $2.10, respectively. Both are expected to grow
at 8 percent. However, the firm’s current P/E ratio of 22 seems
high for this growth rate. The P/E ratio is expected to fall to 18
within five years.
Compute the dividends over the next five years. (Do not round
intermediate calculations. Round your answers to 3 decimal
places.)
Compute the value of this stock price in five
years. (Do not round intermediate calculations. Round
your answer to 2 decimal places.)
Calculate the present value of these cash flows using a 10 percent
discount rate. (Do not round intermediate
calculations. Round your answer to 2 decimal places.)