1. Assume Highline Company has just paid an annual dividend of $ 0.91. Analysts are predicting an 11.6 % per year growth rate in earnings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of 5.4 % per year. If Highline's equity cost of capital is 9.2 % per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Highline stock should sell?

2. Assume Gillette Corporation will pay an annual dividend of $ $0.65 one year from now. Analysts expect this dividend to grow at 11.7% per year thereafter until the 66th year. Thereafter, growth will level off at 1.5% per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.8% ?