The following information applies to the next two questions (29-30)

29.Ferry Corporation has been growing at a rapid pace of 30% per year in recent years. This super growth rate is expected to last for two more years. After that Ferry expects to grow at a constant rate of 8%. Ferry paid an annual dividend of $1.00 per share last year (D₀ = $1.00) and the required rate of return is 12%.

What is the expected stock price at the end of year 2? (Hint: find D₃ first)

1. $54.93
2. $51.83
3. $49.33
4. $47.45
5. $45.63

30.

Based on the information and answer from Q 29, what should be Ferrys stock price today (Hint: discount all future cash flows to the present)?

1. $40.66
2. $38.88
3. $36.08
4. $35.47
5. $34.55