Stock Pricing 
Q 1: 
The Starr Co. just paid a dividend of $1.90 per share on its stock.The dividends are expected to grow at a constant rate of 5% per year, indefinitely.If investors require at 12% return on the stock, what is the current price?What will be the price in three years?In fifteen years?[Show all calculations.]

Q 2:
Use the “Two-Stage Growth Model” Excel spreadsheet for stock pricing contained in the Week 6 slides – please see attached.Calculate the value of shares under the following set of assumptions: earnings per share next year: $50; earnings growth years 2 to 5: 25%; dividend payout ratio: 5% years 1 to 5, increasing to 10% in year 6; required rate of return (discount rate): 15%; growth rate from year 5 to infinity: 14% (these assumptions are roughly in line with Value Line’s projections for Apple Inc.).Table the assumptions and values carefully below.Change the growth and payout assumptions after year 6 to find a set of assumptions that produces a value of shares closer to $500 than your original answer.Following the table, provide a brief discussion of the relation between earnings growth, payout ratios, and near-term and long-term (after five years) earnings and valuation.Discuss briefly your analysis relates to recent market behavior of Apple.