1. Caan Corporation will pay a $3.56 per share dividend next year. The company pledges to increase its dividend by 3.75 percent per year indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company’s stock today?
2. For the company in the previous problem, what is the dividend yield (D1/Po)? What is the expected capital gains yield (g)?