1.

a.Constant growth valuation

Thomas Brothers is expected to pay a $2.9 per share dividend at the end of the year (that is, D1 = $2.9). The dividend is expected to grow at a constant rate of 9% a year. The required rate of return on the stock, rs, is 12%. What is the stock's current value per share? Round your answer to two decimal places.

$ ______

B.Valuation of a constant growth stock

A stock is expected to pay a dividend of $1.25 the end of the year (that is, D1 = $1.25), and it should continue to grow at a constant rate of 7% a year. If its required return is 12%, what is the stock's expected price 5 years from today? Round your answer to two decimal places.

$ ______

C.Valuation of a declining growth stock

Martell Mining Company's ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 8% per year. If D0 = $4 and rs = 9%, what is the value of Martell Mining's stock? Round your answer to two decimal places.

$______

d. Nonconstant growth

Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 41% per year - during Years 4 and 5; but after Year 5, growth should be a constant 7% per year. If the required return on Microtech is 14%, what is the value of the stock today? Round your answer to the nearest cent.

$ ______