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1. The risk-free rate of return is 3 percent: the average rate of return on the market is 11 percent. Stock X has a beta cofficient of 1.2, a constant earnings and dividend-growth rate of 7 percent, and a current dividend of $1.40. If the stock is currently selling at $34 and you hold 1000 units of Stock X which you purchased at $25 each, as a rational proft oriented investor, what should you do and why? Ensure that you use your figures to explain where required. (15 points) 2. The following information has been provided on a popular Hitech stock: Market nsk pre umis given as 9% and rate of return on Treasury bills is 3% The stock has a beta of 12. Furthermore, the stock recently commenced dividend payment and paid a dividend of $3.40 per stock. You expect the dividend to grow rapidly for the first three years a 20%, 15% and 10% and, thereafter, smoothen at 8%. What is the maximum you should pay for this stock? (30 points) 3. Ryan Enterprises forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13.0%, and the FCFFs are expected to continue growing at a 9.0% rate after Year valued at $33million and Preferred stock worth $15million in its capital. The total number of shares outstanding 3, The firm has bonds s 500,000 stocks. What is the value of each stock using the Corporate Valuation method? (45 points) Year FCFF -$15.0 $18.0 $32.0