Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders. (Round your answers to 2 decimal places, e.g. 32.16.)
a. Suppose a company currently pays a $3 annual dividend on its common stock in a single annual installment, and management plans on raising this dividend by 6 percent per year indefinitely. If the required return on this stock is 14 percent, the current share price is $ .
b. Now suppose that the company in (a) actually pays its annual dividend in equal quarterly installments; thus this company has just paid a $.75 dividend per share, as it has for the previous three quarters. The value for the current share price is now $ . (Hint: Find the equivalent annual end-of-year dividend for each year.)