1. You are considering buying a stock and hope to sell it in one year for $21. The stock is expected to pay a dividend of $0.85 in one year. If you require a 15% return on your investment, what is the maximum price that you would be willing to pay for the stock now?

2. You decide to hold the stock in the previous problem for an additional two years. The dividend is expected to grow 10% per year and the required return remains 15%. What is the maximum price that you would be willing to pay for the stock now?