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a) Centrogen Manufacturing Pty Ltd has been growing at a rate of 6 per cent for the past 2 years, and the companys CEO expects the company to continue to grow at this rate for the next several years. The company paid a dividend of $1.20 last year. If your required rate of return is 14 per cent, what is the maximum price that you would be willing to pay for this companys shares today?

b) John has just bought ordinary shares of Royster Pty Ltd. The company expects to grow at the following rates for the next 3 years: 30 per cent, 25 per cent, and 15 per cent. Last year the company paid a dividend of $2.50. Assume a required rate of return of 10 per cent. Calculate the present value of the dividends.