Q2: Stock of the XYZ Corporation is expected to pay annual dividends in the years to come. The next dividend will be of amount 1 and is due in one year from now. A prospective purchaser plans to hold the stock for 10 years. The purchaser uses an effective annual interest rate of 15% for valuation purposes. (a) If the purchaser anticipates a stock price of 50 (excluding dividend) when she sells 10 years from now, what value will be put on the stock now? (b) Suppose the purchaser is willing to pay 20 now for the stock. What stock price is implied in 10 years from now