1. You decide to also value SACs stock using the specific cash flow method. In addition to the $.83/share dividend you anticipate over the next 12 months (Year 1), you project its dividend to grow 7% in Year 2 and 6% in Year 3. At the end of Year 3, you believe the stock will sell for $40/share. Using these assumptions and a Cost of Equity of 9%, what is your estimate of the stocks value per share today? (First draw a timeline assuming all cash flows are made at year end.)

2. If you think SACs dividend will grow at a constant rate of 5% after Year 3, and you believe the Cost of Equity will decrease to 7.5% after Year 3, what is your estimated value of the stock at the end of Year 3? (Use the information from Q#1 as needed.)