1. Stocks of a mature company ZYX pay dividends that grow at 3% per year. Current market stock price is $10. What is your forecast about the stock in 5 years?

(a) $10.00 (b) $11.50 (c) $11.59 (d) $8.59 (e) Not possible to make a reasonable forecast using only information in the problem.

2. The price of a stock is now $150. The required rate of return is 13%. The stock is expected to not pay any dividends next two years. After that, it is expected to pay dividend of $10. After that, dividends are expected to grow at a constant rate. What is this expected constant dividend growth rate?

(a) 4.49% (b) 6.33% (c) 13.00% (d) 7.78% (e) 8.38%