Assignment 4 - Stock Valuation Robert Campbell and Carol Moms are senior vice-presidents of the Mutual of Chicago Insurance Company They are co-directors of the company's pension fund management division A major new client has requested that Mutual of Chicago present an investment seminar to illustrate the stock valuation process. As a result, Campbell and Mors have asked you to analyze the Bon Temps Company, an employment agency that supplies word processor operators and computer programmers to businesses with temporarily heavy workloads. You are to answer the following questions g. Assume that Bon Temps' stock is currently selling at $21.20. What is the expected rate of return on the stock? h. What would the stock price be if its dividends were expected to have zero growth? 1. Assume that Bon Temps is expected to experience supernormal growth of 30% for the next 3 years, then to return to its long-run constant growth rate of 6%. What is the stock's value under these conditions? What are its expected dividend yield and its capital gains yield in Year 12 In Year 4? J. Suppose Bon Temps is expected to experience zero growth during the first three years and then to resume its steady-state growth of 6% in the fourth year. What is the stock's value now? What are its expected dividend yield and its capital gains yield in Year 12 In Year 4? Assignment 4 - Stock Valuation Robert Campbell and Carol Moms are senior vice-presidents of the Mutual of Chicago Insurance Company They are co-directors of the company's pension fund management division A major new client has requested that Mutual of Chicago present an investment seminar to illustrate the stock valuation process. As a result, Campbell and Mors have asked you to analyze the Bon Temps Company, an employment agency that supplies word processor operators and computer programmers to businesses with temporarily heavy workloads. You are to answer the following questions g. Assume that Bon Temps' stock is currently selling at $21.20. What is the expected rate of return on the stock? h. What would the stock price be if its dividends were expected to have zero growth? 1. Assume that Bon Temps is expected to experience supernormal growth of 30% for the next 3 years, then to return to its long-run constant growth rate of 6%. What is the stock's value under these conditions? What are its expected dividend yield and its capital gains yield in Year 12 In Year 4? J. Suppose Bon Temps is expected to experience zero growth during the first three years and then to resume its steady-state growth of 6% in the fourth year. What is the stock's value now? What are its expected dividend yield and its capital gains yield in Year 12 In Year 4