Highland Pet Supplies Company forecasts earnings per share of $2.50 during the coming year. Highland has always paid a dividend equal to 40 percent of its earnings, and it anticipates continuing this practice. Earnings are expected to increase at a rate of 30 percent per year in years 2 and 3, 26 percent in year 4, and 19 percent per year thereafter. The beta of Highland stock is 1.3, the risk-free rate is 5 percent, and the market risk premium has been estimated to be 10 percent. Use Table II to answer the questions below.

Round your answers for the questions below to the nearest cent.

1. What is the current (time 0) value of a share of Highland stock? $
3. What value would you project for a share of stock at the beginning of year 3? $