1. A stock just paid a dividend of $2. Due to the young age of the firm, you expect it to experience 20% growth in year one, 10% growth in year 2, and then constant growth of 5% starting in year 3. If you require a return of 12%, how much should you pay for this stock?

2. XYZ Company's common stock is expected to pay a $3 dividend in the coming year. If investors require a 7% return and the growth rate in dividends is expected to be 3%, what will the market price of the stock be?

3. You are considering purchasing a bond that was issued 8 years ago and has 12 years left to maturity. This bond has a stated coupon rate of 12%. You would like to earn a return of 10%. If payments occur semiannually, how much are you willing to pay for this bond?