1.

You believe that the Non-Stick Gum Factory will pay a dividend of $1 on its common stock next year. Thereafter, you expect dividends to grow at a rate of 2% a year in perpetuity. If you require a return of 10% on your investment, how much should you be prepared to pay for the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

2.

Planned Obsolescence has a product that will be in vogue for three years, at which point the firm will close up shop and liquidate the assets. As a result, forecast dividends are DIV₁ = $3, DIV₂ = $15, and DIV₃ = $9. What is the stock price if the discount rate is 7.2%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)