1. Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $8.50 per share. If the required return on this preferred stock is 6.5%, at what price should the preferred stock sell?

2. Burke Tires just paid a dividend of D₀ = $3.75. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value?