Assume that a company paid a dividend of $0.70 in 2023. Dividends are expected to grow annually by
5% for the next four years (2024 to 2027). From 2028, dividends will grow at a constant rate of 3% per
year. If the cost of equity is 10%, and the market value of the company share was $15.65 after paying the
dividend in 2023:
a) Build a dividend growth model that captures both high growth and constant growth.
b) Should you buy the company share? Explain your answer.