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Company Z and KIC, Inc.: Finance questions

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7. D1 = 10
g = 5%
k = 8%
By DDM, stock price = D1 / (k - g) = 10 / (8%-5%) = 333.33

8. D1=10
D2 = 10*(1+5%) = 10.5
D3=10*(1+5%) = 11.03
D4 = 11.03*(1+5%) = 11.58
Since all earnings are paid out, growth rate becomes zero after year 4.
D5 = D4 = ...

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