Question

please answer all questions with work

7. Santhana Muku, Inc. (SMI) stock is expected to pay a dividend of $3.00 twenty-three years from now (i.e., at t-23; i.e., at the end of the 23rd year). Dividends are forecasted to grow thereafter at a constant rate of 3%/yr forever. The appropriate required return is 8%/yr a. Calculate what the price should be 22 years from now for SMI stock. b. Calculate today's price for SMI stock. 8. String Cheeses, Inc. is considering a project with an initial outlay of $8222.82 & CFs in each of years 1-6 $2000. Compute the project's IRR 9. Wyoming Natural Gas, Inc. is weighing a drilling venture into the Teton Mountains. The venture re- quires an initial outlay of $73M, but is anticipated to generate a perpetual series of $1OM cash flows starting one year from today. 12.5 % is the appropriate required rate of return for valuing this venture. a. Calculate the project's NPV b. Now, suppose that the perpetual series of cash flows starts at t=5 instead of at t1. Recalculate NPV 10. Your task is to value a share of Supernormal Corp. stock using a required return of 10%/yr. The stock is expected to pay a dividend of $1.20 one year from now. Dividends are then expected to grow by 15%/yr. for two years. The growth rate is expected to drop to 12 % / yr . for the next three years. After that, the growth is expected to be stable at 3%/yr. forever.

Answer 1

(7) (a) Expected Dividend 23 Years from Now = D23 = $ 3, Perpetual Growth Rate = 3 % and Required Return = 8%

Price after 22 years = P22 = 3 / (0.08-0.03) = $ 60

(b) Current Price = 60 / (1.08)^(22) = $ 11.0364 ~ $ 11.04

NOTE: please raise separate queries for solutions to the remaining unrelated questions as one query is restricted to the solution of only one complete question with up to four sub-parts.