1) Taipan Trading Company is a mature company that had an EPS of $6 last year (E0). The expected ROE is 14%. An appropriate required return on the stock is 12%. If the firm has a plowback ratio of 80% (or payback of 20%) and constantly grows its dividends at its sustainable growth rate, the value of the no growth component of this firm is _________.

a. $750.00

b. $67.04

c. $834.00

d. $55.60

e. 66.72

2)Lilo and Stitch, Co. paid a dividend of $1 (D0) on $4 (E0) of earnings last year. Earnings and dividends are expected to grow at 30% (g1) over the next 2 years. It is expected to have a P/E ratio of 20 in two years as well. Using an appropriate discount rate of 10% and a 2-stage DDM, what is the intrinsic value of its stock?

a. $114.32

b. $111.74

c. -$5.00

d. $135.20

e. $138.19