West coast surfboards paid dividends of $4 per share last year. The company has a 10% ROE and retains 60% of its earnings for reinvestment purposes.

Answer the following:

1.) What is the growth rate for the west coast surfboards? (round to two decimal places)

2.) What is the value of the stock if your required rate of return is 14%. Use the dividend growth model. Express your answer in standard currency format ($xx.xx)

Formulas:

Growth rate = ROE * percent of profits retained

Common stock value = Div1 /(r-g)

Hint : Do not forget these are last years dividends