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2 mark. Cape Plc will pay a dividend of 3.40 next year. The company has stated that it will maintain a constant growth rate of

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2 mark. Cape Plc will pay a dividend of 3.40 next year. The company has stated that it will maintain a constant growth rate of 4.5 percent a year forever. If you want a return of 9 percent, how much will you pay for the stock? 2 mark. Mary is going to receive a 36-year annuity of 9,100. Nancy is going to receive a perpetuity of 9,100. If the appropriate interest rate is 9 percent, how much more is Nancy's cash ow worth? 6 mark: Describe the agency problems that exist in large public corporations and advise shareholders on how to reduce or eliminate those problems. 9 mark

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