$1)$

Assume EvcoEvco$,$ Inc. has a current stock price of $$$$51\mathrm{.}3651\mathrm{.}36$ and will pay a $$$$1\mathrm{.}951\mathrm{.}95$ dividend in one$$ year; its equity cost of capital is $14\%14\%.$ What price must you expect EvcoEvco stock to sell for immediately after the firm pays the dividend in one year to justify its current$$ price?

We can expect EvcoEvco stock to sell for $$$

$2)$

Suppose AcapAcap Corporation will pay a dividend of $$$$2\mathrm{.}782\mathrm{.}78$ per share at the end of this year and $$$$2\mathrm{.}962\mathrm{.}96$ per share next year. You expect AcapAcap$\text{'}$s stock price to be $$$$51\mathrm{.}0751\mathrm{.}07$ in two years. Assume that AcapAcap$\text{'}$s equity cost of capital is $8\mathrm{.}1\%8\mathrm{.}1\%.$

a$.$ What price would you be willing to pay for a share of AcapAcap stock$$ today, if you planned to hold the stock for two$$ years?

b$.$ Suppose instead you plan to hold the stock for one year. For what price would you expect to be able to sell a share of AcapAcap stock in one$$ year?

c$.$ Given your answer in $($b$),$ what price would you be willing to pay for a share of AcapAcap stock today if you planned to hold the stock for one$$ year? How does this compare to your answer in $($a$)?$

$3)$

Summit Systems will pay a dividend of $$$$1\mathrm{.}431\mathrm{.}43$ this year. If you expect$$ Summit's dividend to grow by $6\mathrm{.}2\%6\mathrm{.}2\%$ per$$ year, what is its price per share if the$$ firm's equity cost of capital is $10\mathrm{.}4\%10\mathrm{.}4\%?$

$4)$

Cooperton Mining just announced it will cut its dividend from $$$$3\mathrm{.}763\mathrm{.}76$ to $$$$2\mathrm{.}472\mathrm{.}47$ per share and use the extra funds to expand. Prior to the$$ announcement, CoopertonCooperton$\text{'}$s dividends were expected to grow at a $3\mathrm{.}3\%3\mathrm{.}3\%$rate$,$ and its share price was $ $49\mathrm{.}29$$$49\mathrm{.}29.$ With the planned$$ expansion, CoopertonCooperton$\text{'}$s dividends are expected to grow at a $4\mathrm{.}6\%4\mathrm{.}6\%$ rate. What share price would you expect after the$$ announcement? $($Assume that the new expansion does not change CoopertonCooperton$\text{'}$s $$risk$.)$ Is the expansion a good$$ investment?

$5)$

Assume Gillette Corporation will pay an annual dividend of $$$$0\mathrm{.}690\mathrm{.}69$ one year from now. Analysts expect this dividend to grow at $11\mathrm{.}4\%11\mathrm{.}4\%$ per year thereafter until the $55$th year.$$ Thereafter, growth will level off at $2\mathrm{.}2\%2\mathrm{.}2\%$ per year. According to the$$ dividend$-$discount model, what is the value of a share of Gillette stock if the$$ firm's equity cost of capital is $8\mathrm{.}6\%8\mathrm{.}6\%?$