3. Use constant growth model to do the problem. If D_(0)= 5 per share g=10% .R=15% (21 poi i) Calculate D_(2) ii) Calculate P_(0)

To solve this problem using the constant growth model, we can use the Gordon Growth Model (GGM), which is a method used to determine the present value of a stock with constant growth in dividends.Given:- 5 g = 10\% R = 15\% D_2 D_2 D_0 D_2 D_0 D_2 = D_0 \times (1 + g)^2 D_2 = \ 5 \times 1.21 D_2 = \ Therefore, is \ P_0 P_0 P_0 = \frac{D_1}{R - g} D_1 D_1 D_0 D_0 D_1 = D_0 \times (1 + g) D_1 = \ 5.50 P_0 P_0 = \frac{\ 5.50}{0.05} P_0 = \ Therefore, the current stock price is \$110.