Help PLEASE The dividend for Should I Inc is currently 175

Help PLEASE!!! :)

The dividend for Should I, Inc., is currently $1.75 per share. It is expected to grow at 12 percent next year and then decline linearly to a 3 percent perpetual rate beginning in four years. If you require a 18 percent return on the stock, what is the most you would pay per share? (Round intermediate calculations to 3 decimal places and final answer to 2 decimal places. Omit the \"S\" sign in your response.) Pay per share

Solution

The growth rate for year_1 will be = 12%

The growth rate for year_2 will be = 9%

The growth rate for year_3 will be = 6%

The growth rate for year_4 will be = 3%

Therefore, we get:

D1 = 1.75(1+0.12) = 1.75*1.12 = 1.96

D2 = 1.96(1+0.09) = 1.96*1.09 = 2.136

D3 = 2.136(1+0.06) = 2.136*1.06 = 2.264

D4 = 2.264(1+0.03) = 2.264*1.03 = 2.332

P3 = 2.332/(0.18*1.03) = 12.578

Therefore,

Po = (D1+D2+D3+P3)/(1.18) = (1.96+2.136+2.264+12.578)/1.18 = 18.938/1.18 = 16.05