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1) Highcorp is expected to pay the dividend $5.20 next year. Its dividend is expected to produce at 9% pa for following year. Dividends are then expected to rise at 4.5% pa for another 5 years. Then they are expected to rise at 3.5%pa forever after that. Shareholders need return on equity is 14.85% pa. Determine the present price of Highcorp shares?

2) ABC Ltd is not expecting to pay dividends for 3 years, at the end of year 4, a dividend of= $2.25 is planned and dividends are expected to be constant forever after that. Necessary rate of return for ABC Ltd equity is 11.25% pa. What is the expected price (ex-dividend) of ABC Ltd’s shares at beginning of year eight? Describe your logic in detail.

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