6 and 7

6. A company's common stock paid $2 per share in dividend today and is presently selling for $27.86. The cost of equity for this company is 12% per annum. If the dividend is expected to grow at a constant rate per year, what is the anticipated dividend growth rate for this company? 7. Biotronics plans to retain and reinvest all of their earn- ings for the next 10 years. Investors believe that begin- ning 11 years from now the firm will begin to pay a dividend of 14.00 per share based on a 30% retention rate. Given a required return of 20%, the stock should sell for what price today