Compost Science Incorporated $($CSI$)$ is in the business of converting Boston's sewage sludge into fertilizer. The business is not in itselfCompany Z$\text{'}$s earnings and dividends per share are expected to grow indefinitely by $3\%$ a year. Assume next year's dividend per share

is $$21.$ The cost of equity is $9\%.$ If Company $Z$ were to distribute all of its earnings, it could maintain a level dividend stream of $$3$ a

share. How much is the market actually paying per share for growth opportunities?

Note: Do not round intermediate calculations. Round your answer to $2$ decimal places.

Present value growth opportunities

very profitable. However, to induce CSI to remain in business, the Metropolitan District Commission $($MDC$)$ has agreed to pay whatever

amount is necessary to yield CSI a $13\%$ book return on equity. At the end of the year, CSI is expected to pay a $$4$ dividend. It has been

reinvesting $30\%$ of earnings and growing at $5\%$ a year.

a$-1.$ Suppose CSI continues on this growth trend. What is the expected long$-$run rate of return from purchasing the stock at $$100?$

Note: Do not round intermediate calculations. Enter your answer as a percent rounded to the nearest whole number.

a$-2.$ What part of the $$100$ price is attributable to the present value of growth opportunities?

Note: Do not round intermediate calculations. Round your answer to $2$ decimal places.

b$.$ Now the MDC announces a plan for CSI to treat Cambridge sewage. CSI's plant will, therefore, be expanded gradually over five

years. This means that CSI will have to reinvest $60\%$ of its earnings for five years. Starting in year $6,$ however, it will again be able to

pay out $70\%$ of earnings. What will be CSI's stock price once this announcement is made and its consequences for CSI are known?

Note: Do not round intermediate calculations. Round your answer to $2$ decimal places.