1) What conditions must exist to use the Gordon Growth Model for valuing a companys stock? Are these conditions present for Sal Song Industries? Explain.

2) Solve the following problem and walk through your solution.

Sal Song Industries just paid a dividend of D0 = $4.61. Analysts expect the company's dividend to grow by 30% this year, by 15% in Year 2, and at a constant rate of 2% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stocks current market value? Do not round intermediate calculations.