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ABC has just issued a dividend of $1.25 per share on their ordinary shares that have...

ABC has just issued a dividend of $1.25 per share on their ordinary shares that have a face value of $1.00. Dividends have been increasing at a rate of 4%pa and this trend is expected to continue for another year. After that the growth rate is expected to be 6%pa for three years before settling down into the long term growth rate of 5%pa. If the market requires a return of 12%pa on these shares:

  1. What is their current price?
  2. What is the expected price five years from now?
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