PLEASE SHOW WORKS

1. Earnings for Scrooge Gloves, Inc. are expected to grow at a rate of 32% for the next 2 years. Following the first two years, the growth rate is expected to drop to a sustainable 4% per year indefinitely. The most recent dividend was $0.75 and the required rate of return is 9.0%. The current value of the stock is closest to:

a. $12.45

b. $24.90

c. $27.80

2. An analyst wants to value a firm with the following characteristics: Last year the firm paid a dividend of $4.00 per share. Expectations are that the firm can increase earnings and dividends at the rate of 25% for the next five years, but after that competitive forces will force the growth rate down to 6% for the foreseeable future. What is the best estimate of the stock's value if the required rate of return is 12%?

$145.67

$165.45

$150.52

3. Estimate an appropriate P/E ratio for a firm with current earnings of $2.50 per share, a current dividend of $1.00 per share, an expected growth rate of 8%, and a required rate of return of 14%.

a. 15.67

b. 20.52

c. 6.67