1. Brumble is thinking about investing in either Zipliners R Us or Massy Ltd. Zipliners R Us is a fairly new business and Brumble anticipates that their dividends will grow at a rate of 3% for the foreseeable future. The next dividend is expected to be $1.50. Massy Ltd on the other hand is a matured company so their dividend has not changed in years. Their last dividends paid was $2.00. If the rate of return for similar stock is 7%, which investment is the cheapest? 2. Karen has just heard about Microsoft Inc. and how investors are buying up their shares which is currently being sold at $235.75 per share. She found out that last year they paid dividends of $1.44 and they anticipate that the dividends would grow at a rate of 8% for years 1 & 2, then it would increase to 10% in years 3 & 4 and finally level off thereafter with a growth rate of 5% until infinity. If the expected rate of return is 8%, determine the stock value of this stock and would you advise Karen to invest in this stock? Explain your answer.