1) A company currently pays no dividend. It is expected that it is going to pay the first dividend of $5/share in four years. After that, the dividends are expected to grow at 5% per year indefinitely. The required return of this stock is 10%. Whatis the intrinsic value of the stock?

2)One investment is expected to yield a payoff of $5 in the next year, and then the payoff will grow at a constant rate of 4% per year for nine more years. If you require a return of 8%, what is the highest price you are willing to pay for this investment?

A. $19.88

B. $25.17

C. $28.94

D. $31.25

E. $39.30