1. The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20 percent a year for the next 4 years and then decreasing the growth rate to 4 percent per year. The company just paid its annual dividend in the amount of $2.70 per share. What is the current value of one share of this stock if the required rate of return is 8.20 percent?
$141.33
$115.23
$101.15
$117.93
$138.63
2. Metroplex Corporation will pay a $4.30 per share dividend next year. The company pledges to increase its dividend by 6.20 percent per year indefinitely. Required: If you require an 11.20 percent return on your investment, how much will you pay for the company's stock today?
$86.00
$89.44
$82.56
$23.27
$80.98