1. If stock is expected to pay a dividend in Year 4 of D4 = $4.50, and dividends are expected to grow at a constant rate of 8%, what is the expected dividend in Year 12?

$6.61

$7.14

$7.71

$8.33

2. A stock pays a current dividend of DIV0 = $4.00. Over the next 3 years the firm expects a super growth period where g1 = 50% per year for the next 3 years. After 3 years the Long-term constant growth rate is expected to be g2 = 4.0%. Assuming that the required return is r = 14.0%, estimate price using the non-constant DDM.

$116.07

$104.56

$41.60

$140.40