1. Obsidian Industries just paid a dividend of $0.33 per share. The dividends are expected to grow at a 24 percent rate for the next 4 years and then level off to a 2 percent growth rate indefinitely. If the required return is 7.5 percent, what is the value of the stock today?
2. If Basalt Hardware plans to pay an annual dividend of 1.68 a share at the end of this year, expects to pay dividends forever and expects to increase the dividend by 3.2 percent annually. Stocks similar to Basalt Hardware have an expected return of 13.8 percent. What is the current value of this stock?