1. ABC Enterprises' stock is expected to pay a dividend of $1.2 per share. The dividend is projected to increase at a constant rate of 3.2% per year. The required rate of return on the stock is 12.7%. What is the stock's expected price 3 years from today (i.e. solve for P3)?
2. ABC just paid a dividend of D0 = $4.9. Analysts expect the company's dividend to grow by 30% this year, by 22% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this stock is 12%. What is the best estimate of the stock's current market value?