1. A corporation has just paid dividend $1,000. If the dividend can grow 20% for the first three years and 10% afterwards, the fair price of the stock using 15% discount rate is close to...

a. $28,000

b. $28,300

c. $28,700

d. $27,700

2. A value-weighted index consists of 3 stocks and stands at 6,000 at the beginning of the month. The prices, market capitalization, and free float of the stocks are as follows. Stock A: price 500, market cap. 2.5 trillion, and free float 20%. Stock B: price Rp300, market cap. 1.5 trillion, and free float 60%. Stock C: price 200, market cap. 4 trillion, and free float 15%. If by the end of the month, only stock C falls to 160, what will be the index?

a. 5,840

b. 5,640

c. 4,800

d. 5,400