1. A firm has just paid its current dividend of D₀ = $2.00. Analysts expect the firm's dividend to grow by 25% this year, by 20% in year 2, and then at a constant rate of 5% in year 3 and thereafter. If investors have a required return of 12%, what is the current price of the stock?

2. a firm plans to issue a $50 par value perpetual preferred stock with an annual dividend of $6.50 per share. if the required return is 6.5%, at what price should this preferred stock sell for?