1. Thorton Electric Corp. just paid a $2.50 annual cash dividend. It plans to keep the future cash flows to the equity holders at this level for the foreseeable future as no future growth is expected. If the required rate of return by common stockholders is 12 percent, what is the price of this common stock?

2. Johns Software Co. just paid an annual dividend of $3.50. The required annual rate of return is 10 percent. If the dividend is expected to grow at 2 percent every year, what should be the stock price?