Equity Valuation

$1.$ What is the maximum price you would pay for a stock that has an expected dividend of $$2\mathrm{.}50$

which is expected to grow at $4\%$ per year if you require a $12\%$ return?

$2.$ What is the value of a stock with the following characteristics: it just paid a dividend of $$2\mathrm{.}08,$

which will grow at $15\%/$year for the next three years. After that, the growth will slow to $3\%/$year

forever. The required return is $12\%.$

$3.$ A company does not currently pay a dividend, so you have to use the free cash flow method of

valuing the company$$s stock. The free cash flow to equity for a company is $$8$ billion, the WACC

is $8\%,$ the required return on equity is $10\%,$ and the expected growth rate is $5\%.$ If there are $500$

million shares outstanding, what is the price per share?

$4.$ You are asked to value a company that currently has negative earnings $($net profit$)$ but positive

and growing revenue. You decide to use the Price$/$Sales method for valuation. The three nearest

competitors have P$/$S ratios of $3\mathrm{.}5,4\mathrm{.}2,$ and $5\mathrm{.}7.$ If the subject company has sales $($per share$)$ of

$$8,$ what should the price of the stock be using both the average and the median P$/$S ratios?