1. Analysts expect Canine Cable Corporation to grow by 20 percent for the next three years. Industry experts believe that their new cable system will boost Internet speeds by more than 30 percent. The company expects fierce competition to force its growth rate to a constant five percent after that. Canine just paid a dividend (Dividendyear0) of $1.25. Investors' required rate of return is 16 percent. What is the value of Canine stock today?

2. Smiling Stallion Aluminum Siding has found a new method for attaching aluminum siding that guarantees no leakage, mold, or mildew when installed by a qualified contractor. This breakthrough in quality should make their company grow at a phenomenal rate of 30 percent for two years before competitors find a way to circumvent the company's patent. Wall Street analysts expect their growth to drop to a constant six percent after that. Smiling Stallion just paid a dividend (Dividendyear0) of $1.10. Investors require a 12 percent rate of return. What would a rational investor be willing to pay for a share of Smiling Stallion stock?

3. Bells and Bows Baby Corporation expects its new self-cleaning baby bottle to be a big hit with parents. Bells and Bows expect their dividend to grow at a rate of 25 percent for the first four years, then to drop to a growth rate of 15 percent for two more years and then settle down to an eight percent growth rate after that. Bells and Bows just paid a dividend (Dividendyear0) of $2.60. Investors required rate of return is 14 percent. What would an investor be willing to pay for their stock?

4. Stunt Inc. expects its mass-produced android (affectionately known as Data) to be a big hit with the major movie studios. Data can perform any stunt with no liability worries, thereby drastically reducing insurance costs. Stunt Inc. expects dividends to grow at a rate of 25 percent for the first five years and then drop to 14 percent for the next two years and then to fall to a steady growth rate of eight percent. The last dividend (Dividendyear0) was $3.10. The investors' required rate of return is 15 percent. What would an investor be willing to pay for this stock?

5. Challenge Problem Cats Galore Company is experiencing a severe slump in sales. They expect their dividends to decline at a rate of six percent for three years. After three years, Cats Galore awaits completion of its new plant, and the efficiencies of the new plant will significantly reduce costs. Cats Galore anticipates the new plant will cause their dividends to increase at a constant rate of seven percent into the foreseeable future. Cats Galore just paid a dividend (Dividendyear0) of $3.80. Investors' required rate of return is 13 percent. What would an investor be willing to pay for this stock?

6. Challenge Problem The Elephant Eloquence Corporation has fallen on hard times. Its management expects to pay no dividends for the next three years. However, the dividend for Year 4 (Dividendyear4) will be $1.10 per share, and the firm expects it to grow at a rate of three percent in Year 5, six percent in Year 6, and ten percent in Year 7 and after that. If the required return for Elephant Eloquence Corporation is 18 percent, what is the price of the stock today?

7. Challenge Problem Dr. Phelps owns and operates the Carolina Pines Kennel, and she has decided to incorporate and go public. As her trusted investment banker, you are to determine the selling price for Carolina's common stock. Carolina expects the first dividend (Dividendyear0) to be $5.00 and grow at a constant rate of six percent for the foreseeable future. Given Carolinas' financial structure and asset investment, investors require a five percent rate of return on their investment. Given this information, what is the value or price for Carolinas' common stock?

8. Challenge Problem The B/Slash/B Corporation has been experiencing some tough times lately. They predict their growth rate will decline by 11 percent for the next two years then decline by six percent in the following two years. After that, the owners are confident their new line of products will cause their growth rate to increase to 15 percent for two years and then level off to four percent for the foreseeable future. Investors' required rate of return is 13 percent, and the last dividend paid (Dividendyear0) was $1.60. What would an investor be willing to pay for this stock today?