1. When would the total payout model be most reliable to use?

(a) If the firm undertakes share repurchases.

(b) If dividends are expected to grow at a constant expected rate.

(c) When dividend growth is not initially constant but eventually slows down to a constant rate.

(d) If looking to find present value of the future dividends the firm will pay.

2. PDQ Corporation is forecast to have total earnings of $1 billion next year and to pay out a total of 21% of these earnings to shareholders in the form of share repurchases and dividends. PDQ Corporation has 100 million shares outstanding. Its earnings are forecast to grow at a rate of 6% constantly. The stock's required rate of return is 10%. What is the value of a share today? Answer in dollars and round to the nearest cent.