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If the market expects a 10 rate of return on trend-line at

Trend-Line Inc. has been growing at a rate of 6% per year and is expected to continue to do so indefinitely. The next dividend is expected to be $5 per share.

a. If the market expects a 10% rate of return on Trend-Line, at what price must it be selling?

b. If Trend-Line's earnings per share will be $8, what part of Trend-Line's value is due to assetsin place, and what part to growth opportunities?

Constant growth rate...... 6.00%
Dividend per share....... $5.00
Expected rate of return (a).... 10.00%
Earnings per share (b) ...... $8.00

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