1.) Six months ago, you purchased 1,200 shares of ABC stock for $21.20 a share. You have received dividend payments equal to $0.60 a share. Today, you sold all of your shares for $22.20 a share. What is your total dollar return on this investment? What is your total percentage return on this investment? Similarly, 8 months ago, you purchased 400 shares of Winston, Inc. stock at a price of $54.90 a share. The company pays quarterly dividends of $0.50 a share. Today, you sold all of your shares for $49.30 a share. What is your total dollar return on this investment? What is your total percentage return on this investment? What is your aggregate return together on these two investments?

2.)Consider a growth stock. Laramie Connection (LC) has the following data:

Expected EPS next year is $6.50;

Payout ratio is 40%;

Return on equity (ROE) is 25%

Costs of capital or discount rate, r = 20%.

a) What is the value of LC's stock? What is the value of LC's growth opportunity?

b) What happens to the value of LC's stock if the company increases the payout ratio from 40% to 60%? What is the change in the value of LC's growth opportunity relative to part (a) answer? Please explain.

c) What happens to the value of LC's stock if the company increases the payout ratio from 40% to 60%, and its ROE is 10% instead of 25%?

d) What is the change in the value of LC's growth opportunity relative to part (a) and part (b) answers? Please explain.