1. The next dividend payment by Boundary Bay Inc. will be $0.89 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever. If the stock currently sells for $38 per share, what is the required return?

a. 5.00%

b. 7.34%

c. 9.97%

d. 2.34%

2. Far Side Corporation is expected to pay the following dividends over the next four years: $10, $8, $5, and $2. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 11 percent, what is the current share price?

a. $51.25

b. $41.35

c. $42.71

d. $44.84

e. $43.53