ABC Corp. has just paid a dividend of $3 per share. You—an experienced analyst—feel quite sure that the growth rate of the company ’ s dividends over the next 10 years will be 15% per year. After 10 years you think that the company ’ s dividend growth rate will slow to the industry average, which is about 5% per year. If the cost of equity for ABC is 12%, what is the value today of one share of the company?

With only a part-time job and the need for a professional wardrobe, rachel quickly maxed out her credit card the summer after graduation. with her first full-time paycheck in august, she vowed to pay $270 each month toward paying down her $8 comma 368 outstanding balance and not to use the card. the card has an annual interest rate of 18 percent. how long will it take rachel to pay for her wardrobe? should she shop for a new card? why or why not?