1. Coca Cola just paid a $3 dividend and investors expect that dividend to grow by 4% each year forever. If the required return on the stock investment is 12%, what should be the price of the stock today?
A 25
B 37.5
C 39
D 55
E 75
2. Dull Company is expected to grow at various rates over the next three years. The company just paid a $2.5 dividend. The company expects to grow at 100% for the next two years (effecting D1, D2), then the company expects to grow at a constant rate of 10% per year indefinitely. If the required rate of return on Dull's common stock is 18%, what is a share of Dull's stock worth?
A $102.99
B $109.52
C $110.17
D $118.28
E $120.37