1. Last week, Onboard Co. has announced that the next two annual dividends will be in the amount of $2.31 and $4.05, respectively. After that, the dividends will increase by 3.25 percent annually. The required return on this stock is 13.53 percent. What is the current price per share? (Hint: draw this out on a timeline.)
2. Dvorak Enterprises is expected to pay a stable dividend of $6 per share per year for the next 8 years. After that, investors anticipate that the dividends will grow at a constant rate of 2.3 percent per year indefinitely. If the required rate of return on this stock is 8 percent, what is the fair market value of a share of Dvorak?