a). P0 = [{D0 x (1 + g1)} / (1 + r)] + [{D0 x (1 + g1) x (1 + g2)} / (1 + r)2] +
[{D0 x (1 + g1) x (1 + g2) x (1 + g3)} / (1 + r)3] + [{D0 x (1 + g1) x (1 + g2) x (1 + g3) x (1 + gC)}
/ {(r - gC) x (1 + r)3}]
= [($2 x 1.30) / 1.13] + [($2 x 1.30 x 1.25) / 1.132] + [($2 x 1.30 x 1.25 x 1.15) / 1.133] +
[($2 x 1.30 x 1.25 x 1.15 x 1.06) / {(0.13 - 0.06) x 1.133}]
= $2.30 + $2.55 + $2.59 + $39.22 = $46.66
b). P0 = [{D0 x (1 + g1)} / (1 + r)] + [{D0 x (1 + g1)2} / (1 + r)2] +
[{D0 x (1 + g1)2 x (1 + gC)} / {(r - gC) x (1 + r)2}]
= [($2 x 1.10) / 1.13] + [($2 x 1.102) / 1.132] + [($2 x 1.102 x 1.06) / {(0.13 - 0.06) x 1.132}]
= $1.95 + $1.90 + $28.70 = $32.54
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