1. Westpac (WBC) reported earnings per share (EPS) of $2.45 for the year to December 2014. ANZ Bank and CBA are considered to be comparable firms. ANZ's share price is currently $34.59 and its Earnings per Share (EPS) at the last report date was $2.57. CBA's share price is $90.81 and its comparable EPS is $5.21. What is the best estimate of Westpac's share price based on the comparable Price-Earnings ratios of ANZ and CBA?

Select one:

A.$73.89

B.$89.23

C.$36.95

D.$37.84

2.

A high growth firm's stock is forecast to pay its first dividend of $12 in 3 years (t=3 yrs). The dividend will be paid semi-annually and is forecast to grow at 4% every 6 months for 2 years (t=3 to t=5 yrs). After the last dividend in year 5 (t=5 yrs), the firm's industry is likely to face strong competition from overseas and the dividend is actually forecast to shrink. After year 5, the dividend is thus expected to grow at a rate of -1% every 6 months, forever. The required return of the stock is 10.25% pa given as an effective annual rate (EAR). The growth rates are all given as effective 6 month rates. What is the best estimate of the share price?

Select one:

A.$269.28

B.$186.13

C.$184.61

D.$261.54