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Can you please answer a), b), and c). If you can explain it, better. I...

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Finance

Can you please answer a), b), and c). If you can explain it, better. I don't understand the topic very well.

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5-6 Bayboro Sails is expected to pay dividends of S2.50, $3.00, and $4.00 in the next three years-Di, Dz, and D,, respectively. After three years, the dividend is expected to grow at a constant rate equal to 4 percent per year indefinitely. Stockholders require a return of 14% to invest in the common stock of Bay boro Sails. a. Compute the present value of the dividends Bayboro is expected to pay over the next three years. b. For what price should investors expect to be able to sell the common stock of Bayboro at the end of three years? (Hint: The dividend will grow at a constant 4 percent in Year 4, Year 5, and every year thereafter, so Equa- tion 5-6 can be used to find P,^the appropriate dividend to use in the numerator is D4.) c. Compute the value of Bayboro's common stock todav.

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