**Please Answer Question #9. Question #8 is included for #9 calculations.**

8. Now it is 2020, the whole market is struggling. Spahr cosmetics decided to adopt a constant dividends policy. The management announced that it is going to pay $5 annual dividends indefinitely. What is the stock price if the required rate of return is 12%?

1. $ 40.68
2. $ 83.33
3. $ 41.67
4. $ 35.43

9. If you were to buy Spahr Cosmetics stock now at the price you calculated at question #8 and sell it for $50 after receiving the dividend one year from now (dividends is $5 per share as indicated in the previous question), what would be your holding period return (HPR)?

1. 35%
2. -34%
3. 32%
4. 55%