Calculation of Dividend

CFA Level II Equities
#1

Hi, I keep getting confused with dividend calculations. So if a company will start paying dividend after 4 years and the first dividend is $1 and growth rate is 5%. r is 7%. What is the value? Shouldn’t 1 x (1+5%)/ (7% - 5%)(1+7%)4 be equal to 1/ (7% - 5%)(1 + 7%)3.

How do I know when to use the former and when to use the latter?

#2

Draw a timeline.

Remember: the Gordon growth model uses D1 to get the price P0.

#3

So in year 4, the dividend paid is D0. Shouldn’t we be using D1 in the calculation?