1.An analyst has made the following estimate of Company Z's future dividends. In year 5, Company Z is expected to stop fluctuating and begin paying a constant dividend of $1.61. If the required rate of return is 13 %, what is the stock's price?

Year	Dividend
1	$2.47
2	$3.02
3	$1.35
4	$2.96
5	$1.61

The current price of Company Z's stock is_____(round to the nearest cent)

2.Constanza Energy is an oil company with average risk. The average industry P/E ratio for oil companies is 17.If Constanza has earnings per share of

$ 0.41,what would be a fair price for its stock?

The fair price for Constanza's stock would be____(round to the nearsest cent)

3.Company Z is currently priced at $32.They just reported earnings per share of $0.94. What is the P/E ratio that investors are willing to pay for a share of CompanyZ's stock?

The P/E ratio investors are willing to pay for a share of Company Z's stock is______(round to two decimals)

4.Colt Manufacturing has two divisions: 1) pistols; and 2) rifles. Betas for the two divisions have been determined to be beta (pistol)equals=0.7

and beta (rifle)equals=1.0 The current risk-free rate of return is 5%,and the expected market rate of return is 11.5%. The after-tax cost of debt for Colt is 6.5%.The pistol division's financial proportions are 32.5% debt and 67.5% equity, and the rifle division's are 42.5% debt and 57.5% equity.

a. What is the pistol division's WACC?

b.What is the rifle division's WACC?