Neenah Paper (NP) is currently selling for $49 per share. The dividends for the next three years are expected to be $1.80 for 2021, $2.08 for 2022, and $2.12 for 2023. Value Line forecasts the price per share to be approximately $70 by the end of 2023. If we desire a rate of return of 10%, using the Discounted Cash Flow Model, what price would we value this stock? Would we consider NP to be a potentially good investment?

The price of Arena Pharmaceuticals, Inc. (ARNA) is currently $61 per share. The company pays no dividends and has negative earnings. However, they have in development drugs for the treatment of autoimmune diseases such as colitis and Crohns disease. The 1-year target estimate price on Yahoo is $95. We predict that it will take Arena 3 years to reach the $95 level. If our desired rate of return is 13%, would this be a potentially good buy for us? What price would we value the stock? Which dividend discount model can we use even if the company pays no dividends? How would you rate the risk level of this company?