1. PPLG Company just paid a dividend of $3 per share. You believe that the dividend growth rate will be 10% for the next two years and the selling price of the stock will be $45 at the end of year 2. What is the maximum price you are willing to pay for the stock if you require a 15% return?
a. $41.08
b. $38.28
c. $39.64
d. $37.71
e. $36.41
2. What financial statements will you utilize in making your proposal, and how will you use these statements?