1. Assume Highline Company has just paid an annual dividend of $ 1.03. Analysts are predicting an 10.4 % 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 4.8 % per year. If? Highline's equity cost of capital is 9.1 % per year and its dividend payout ratio remains? constant, for what price does the? dividend-discount model predict Highline stock should? sell?
2. Julia offers in a signed writing to sell her book collection to Linda for $15,000. Three days later, before Linda accepts, Julia dies and her heirs state to Linda that the $15,000 offer is revoked and that they will not sell the collection for less than $20,000. One week after the original offer was made by Julia, Linda sends a signed acceptance of Julia’s $15,000 offer. Has a contract been formed? Explain why or why not, and where the legal situation stands.