Answers
We calculate the present value of a growing annuity as :
PV = (P / (r - g)) * [1 - ((1 + g) / (1 + r))n]
where P = first dividend payment
r = required return per year
g = constant growth rate
n = number of periods
P is the first dividend, which is $1.25 + 10% = $1.375
a] PV = (1.375 / (0.18 - 0.10)) * [1 - ((1 + 0.10) / (1 + 0.18))5] = $5.09
b] PV = (1.375 / (0.18 - 0.10)) * [1 - ((1 + 0.10) / (1 + 0.18))20] = $12.97
c] PV = (1.375 / (0.18 - 0.10)) * [1 - ((1 + 0.10) / (1 + 0.18))25] = $14.22
d] PV = (1.375 / (0.18 - 0.10)) * [1 - ((1 + 0.10) / (1 + 0.18))40] = $16.15
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