1)ABC company is expecting a period of intense growth and has decided to increase its annual dividend by 10 percent a year for the next two years. After that, it will maintain a constant dividend growth of 2%. The company just paid $1.80 per share. What is the value of this stock if the required rate of return is 13 percent?

2)

XYZ company has $140,000 budget constrain on new project (it can invest only $140,000). The company is considering several projects. Project A costs $100,600 and has PV of future cash inflows of $150,750. Project B costs $39,000 and has PV of future cash inflows of $36,600. Project C costs 70,400 and has PV of future cash inflows of $75,450.

Which project or projects, if either, should the company accept based on the profitability index rule?