1. Firm A is expected to pay $2 dividend next year. The dividend will then grow by 10% for another two years. After that, the dividend growth rate will decrease to 5% and last forever. How much would you like to pay for this stock if your required rate of return is 7%? Draw Timelines with Growth Rate Indicated

2. Firm B just paid a dividend of $1.6. The dividend will grow by 3% for one year and 5% for another three years. After that, the dividend growth rate will increase to 10% and last forever. How much would you like to pay for this stock if your required rate of return is 12%? Draw Timelines with Growth Rate Indicated