Static Inc pays constant dividends of $1.50 a year and is currently priced at $7.50/share (note: this means that Static falls into the zero-growth in dividends case). Dynamic Inc just paid a dividend of $ 1.25/share the analyst consensus is that this will grow at a rate of 4 percent per year into the foreseeable future.

A) If you believe in the DCF approach to stock valuation and estimate that the required return on Dynamic's stock is about the same as Static's stock, how much should you be willing to pay for a share of Dynamic stock?

B) If you believe in the comparable approach to stock valuation and observe that: (a) Dynamic's stock price is currently $10.50/share and (b) the industry P/E multiple (which also applies to Dynamic) is 6, what is Dynamic's earnings per share (EPS) estimate for the next year?