1. An analyst gathered the following financial information about a firm:

Estimated (next years) EPS $10 per share

Dividend payout ratio 40%

Required rate of return 12%

Expected long-term growth rate of dividends 5%

What is the analysts estimate of intrinsic value? Show work.

2. ABC Company has 1.13 billion shares outstanding trading at a market price of $32 per share. The companys book value of equity is $5.5 billion. The market value of outstanding debt is $2 billion and the book value of outstanding debt is $1.918 billion. The stock has a beta of 1.10. The company has a marginal tax rate of 35%. The companys bonds are AAA rated and trade at a 1% yield spread to the government bond rate. The government bond rate is 6.25%. The equity risk premium is 5%. Calculate the companys WACC.