Explain each letter in the questions above.

b) If the terminal growth rate is projected to be 6%, rather than 5%, re-estimate the value of a share of Global Services. Does this new estimate make sense? c) If the expected market return is assumed to be 9%, rather than 10%, re-estimate the value of a share of Global Services. Does this new estimate make sense? d) If the systematic risk coefficient (beta) of the stock increases from 1.25 to 1.40, re-estimate the value of a share of Global Services. Does this new estimate make sense? e) If Global Services' estimated beta is statistically insignificant, suggest an alternative approach to arrive at the required rate of return (k) on the stock and use this new k to re-estimate the value of a share of Global Services. Assume Global Services' bonds outstanding are traded at a yield of 6.15% and the risk premium required for Global Services' equity shareholders over bond holders is 4.5%. Year3 Year4 Year5 Year6 Year7 Year1 Year0 Year2 Growth rate 0.09 0.09 0.15 0.15 0.15 0.15 0.09 $1.75 $2.01 $2.31 $2.66 $3.06 $3.34 $3.64 $3.96 FCF WACC 15% 15% 15% 15% 15% 15% 15% 15% Year 1 5 6 2 Discount Factor 1/((1+WACC)^YEARS OF PROJECTION Present Value $1.75 $1.76 $1.76 $1.77 $1.78 $1.69 $1.61 $1.53 Beta 1.25 Rf 0.0205 Rm-Rf 0.1 Rf+Beta(Rm-Rf Cost of equity or WACC 15% Terminal Value Terminal Value at Long Term Cash Flow Growth Rate@ 6% Sum of PV $13.65 $13.65 Sum of PV WACC 15% WACC 15% 6% Long Term Cash Flow growth rate Terminal Value 5% Long Term Cash Flow growth rate Terminal Value $16.84 $18.99 Present Value of Terminal Value Present Value of Terminal Value $6.51 $7.34