10. You are considering the purchase of a common stock that just paid a dividend of $2.00. You expect this stock to have a growth rate of 30 percent for the next 3 years, then to have a long-run normal growth rate of 10 percent thereafter. If you require a 15 percent rate of retum, how much should you be willing to pay for this stock? a. $97.50 b. $62.68 c. $82.46 d. $79.15 e. $71.27 11. You are given the following data: (1) (2) (3) (4) (5) The risk-free rate is 5 percent. The required return on the market is 8 percent. The expected growth rate for the firm is 4 percent. The last dividend paid was $0.80 per share. Beta is 1.3. Now assume the following changes occur (1) The inflation premium drops by 1 percentage point. (2) An increased degree of risk aversion causes the required return on the market to go to 10 percent after adjusting for the changed inflation premium. (3) The expected growth rate increases to 6 percent (4) Beta rises to 1.5. What will be the change in price per share, assuming the stock was in equilibrium before the changes? a. O$16.97 b. +$12.11 c. +$6.28 d. +$2.78 e. $4.87