1.If the expected ROE on reinvested earnings is equal to k, the multistage DDM reduces to:

	A.	V0= (expected dividend yield in year 1)/k.
	B.	V0= (Treasury bond yield in year 1)/k.
	C.	V0= (expected EPS in year 1)/k.
	D.	V0= (Market return in year 1)/k.

2. Linear Technology is in the high tech industry

2 years from now, the company expects the earnings per share (EPS)of 10 and payout of 50% of earnings as a dividend. Once profitable, earnings and dividends will grow at 15% for 5years (in years 3-7)

From year 8, growth will be perpetual at 4% If the required return is 20%, what are the shares currently worth?

		$0.6
		$0.37
		$0.81
		$0.10