a). Tre-Bien, Inc., is a fast-growing technology company. Management projects rapid growth of 30 percent for the next two years, then a growth rate of 17 percent for the following two years. After that, a constant-growth rate of 8 percent is expected. The firm expects to pay its first dividend of $2.44 a year from now. If dividends will grow at the same rate as the firm and the required rate of return on stocks with similar risk is 22 percent, what is the current value of the stock? (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)

Current value $ ______________

b). You own a company that competes with Old World DVD Company. Instead of selling DVDs, however, your company sells music downloads from a Web site. Things are going well now, but you know that it is only a matter of time before someone comes up with a better way to distribute music. Your company just paid a $2.30 per share dividend, and you expect to increase the dividend 11 percent next year. However, you then expect your dividend growth rate to begin going downto 5 percent the following year, 2 percent the next year, and to -2 percent per year thereafter. Based upon these estimates, what is the value of a share of your companys stock? Assume that the required rate of return is 14 percent. (Round dividends in intermediate calculations to 4 decimal places, e.g. 1.5325 and final answer to 2 decimal places, e.g. 15.25.)

Value of a share

$ _______________