9. a. Doldrums Plastics has been paying a $3 dividend each year for two years and company reports indicate that management intends to continue this dividend payment for the foreseeable future. The...

9. a. Doldrums Plastics has been paying a $3 dividend each year for two years and
company reports indicate that management intends to continue this dividend
payment for the foreseeable future. The market determined required rate of
return on Doldrums's common stock is 15 percent, what will be the price of a share
of stock?

b. Suppose that an aggressive new Chief Executive Officer, Dee Uamoca, is hired by
Doldrums. Because of the productive policies and processes instituted by
Uamoca, capital market investors anticipate that Doldrums's earnings and
dividends will increase at a constant 8 percent rate beginning immediately. What
would be the price of a share of Doldrums common stock if the required rate of
return remains at 15 percent?