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1. Baldwin Corp. just paid a dividend of $2.00. Over the next two years this dividend is expected to grow by 20% per year. After two years, dividend growth is expected to level off at 10%. If the required rate of return on Baldwin stock is 12%, what should be the price of Baldwin stock today?

2. The owner of Ruffle Ridge Hotel is considering a new outdoor pool to attract more weekend travelers. The cost of the pool is $35,000. Installation requires an additional $10,000, and $5,000 will be needed for a fence. In addition, beginning next year, the hotel's property taxes will increase from $8,500 to $9,500 per year for the entire ten-year estimated life of the pool. What is the project's initial cash flow?

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