1: NONCONSTANT GROWTH

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from today. The dividend should grow rapidly-at a rate of 49% per year-during Years 4 and 5; but after Year 5, growth should be a constant 4% per year. If the required return on Computech is 17%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.

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2: NONCONSTANT GROWTH

Carnes Cosmetics Co.'s stock price is $77.57, and it recently paid a $2.25 dividend. This dividend is expected to grow by 19% for the next 3 years, then grow forever at a constant rate, g; and r_s = 12%. At what constant rate is the stock expected to grow after Year 3? Round your answer to two decimal places. Do not round your intermediate calculations.

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Please solve these two problems.