1.If Pepperdine, Inc.'s return on equity is

17

percent and the management plans to retain

55

percent of earnings for investment purposes, what will be the firm's growth rate?

2.

(Common

stock

valuation)

Header Motor, Inc., paid a

$3.96

dividend last year. At a constant growth rate of

4

percent, what is the value of the common stock if the investors require a

15

percent rate of return?