1. CONSTANT GROWTH VALUATION Tresnan Brothers is expected to pay a $4 per share dividend at the end of the year (i.e., D1 = $4). The dividend is expected to grow at a constant rate of 9% a year. The required rate of return on the stock, rs, is 19%. What is the stock's current value per share? Round your answer to two decimal places.
2. A convertible bond has a coupon of 7.5 percent, paid semiannually, and will mature in 10 years. If the bond were not convertible, it would be priced to yield 6.5 percent. The conversion ratio on the bond is 15 and the stock is currently selling for $50 per share. What is the minimum value of this bond?