1. Miller Hardware paid an annual dividend of $1.10 per share recently. Today, the company announced that future dividends will be increasing by 3.5 percent annually. If you require a 12 percent rate of return, how much are you willing to pay to purchase one share of this stock today?

2. The common stock of Textile Inc. pays a quarterly dividend of $0.40 a share. The company has promised to maintain a constant dividend even though economic times are tough. How much are you willing to pay for one share of this stock if you want to earn a 10 percent annual return?