An analyst knows with certainty that Erfy Sdn Bhd will exist for two years and have the following cash flows per share: Calculate the stock price of Erfy Sdn Bhd if the opportunity cost of capital is 15%. Stock price =[RM50/(1.15)]+[RM50/(1.15)]=81.29 The analyst in problem a) realizes that Erfy Sdn Bhd costs may not be RM100 per share with certainty. Instead each there is 20 percent chance that worker will be seriously injured and that Erfy will have to pay the employee's medical expenses and lost wages. If an injury does occur, Erfy's costs equal RM110 share. If an injury does not occur (which has a probability of 0.8 ) then Erfy's costs equal RM97.50 per share. i. Calculate the Erfy's expected net cash flow in each year. ExpectedNCF=(0.852.50)+(0.240)=RM50 ii. If the opportunity cost of capital is 15 percent, what is the stock price? Stockprice=[RM50/(1.15)]]+[RM50/(1.15)]]=81.29 iii. Suppose that Erfy purchase worker's compensation insurance to cover the costs of medical expenses and lost wages. The premium of RM2.50 per share for full coverage, what is the stock price? iv. If the premium is RM4 per share for full coverage, what is the stock price