ABC Inc is experiencing rapid growth. Dividends are expected to grow at 30% per year during the next 3 years, 20% during the 4^th year, 10% during the 5^th year, no growth during the 6^th year, and then decline of 2% per year indefinitely. ABC stock is currently selling for $85.58 per share; required rate of return is 15%.

1. What is the projected dividend for year 2?
2. Alexander bought the stock today. Suppose he can reinvest the dividends earning 5% a year. What annual compound rate of return he could realize if he sells the stock after 4 years (right after getting the 4^th dividend)?