USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS

Ridgemont Can Company's last dividend was $$1\mathrm{.}55.$ You plan to purchase the stock today because you feel that the growth rate will be $8$ percent for the next three years and the stock will reach $$22\mathrm{.}50$ per share by the end of the three years.

How much should you be willing to pay for the stock if you require a $15$ percent return?

a$)$ $$16\mathrm{.}97$

b$)$ $$18\mathrm{.}90$

c$)$ $$21\mathrm{.}32$

d$)$ $$32\mathrm{.}63$

e$)$None of the above

How much should you be willing to pay for the stock if you feel that a $6$ percent growth rate can be maintained indefinitely and you require a $17$ percent return? Base your decision on the DDM$.$

a$)$ $$18\mathrm{.}90$

b$)$ $$14\mathrm{.}94$

c$)$ $$20\mathrm{.}73$

d$)$ $$16\mathrm{.}27$

e$)$ $$25\mathrm{.}83$