1) Suppose a firm just paid a dividend of $1.00. You expect that the firm will grow at 30% next year, 20% the following year, and at a constant rate of 4% thereafter. The required return on this firms equity is 14%. What is the price of the stock?

Note: Show your answer in units of dollars, use plain numbers with at least two digits after the decimal (e.g., for $12,345.67, type 12345.67).

2)What is theoretically the highest possible EAR given an APR of 31%?

Hint: Think about compounding/discounting periods in time value of money; when you compound/discount more times during a year, does it increase or decrease the EAR?

Note: Show your answer in units of percents, use plain numbers with at least two digits after the decimal (e.g., for 12.34%, type 12.34).