Question 1: Answer the following

a) What would you pay today for a stock that is expected to make a $1.50 dividend in one year if the expected dividend growth rate is 3% and you require a 16% return on your investment? Answer $11.54

b) ACME Limited issued preferred shares that pay an annual dividend of $1.75 per share? What would be the market price of the shares if the shareholders expect a return of 6%? Answer: $29.17

Please include formulas and do not use excel. Show all steps please :)