A. Currently, a firm has a benchmark PE of 18.7 and an EPS of $4.18 (annual). Earnings are expected to grow 3.20% annually. What is the percent change in the stock price after the first year?

3.67%

4.23%

4.08%

2.89%

3.20%

B.A new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 15% a year for the next four years and then decreasing the growth rate to 3.50% per year. The company just paid its annual dividend in the amount of $.20 per share. What is the current value of one share of this stock if the required rate of return is 15.50%?

$2.04

$1.82

$2.71

$2.49

$3.05