In $2006$ and $2007,$ Kenneth Cole Productions $($KCP$)$ paid annual dividends of $$$$0\mathrm{.}71.$ In $2008,$ KCP paid an annual dividend of $$$$0\mathrm{.}39,$ and then paid no further dividends through $2012.$ Suppose KCP was acquired at the end of $2012$ for $$14\mathrm{.}73$ per share.

a$.$ What would an investor with perfect foresight of the above been willing to pay for KCP at the start of $2006?($Note$$: Because an investor with perfect foresight bears no$$ risk, use a$$ risk$-$free equity cost of capital of $5\mathrm{.}3\%.)$

b$.$ Does your answer to $($a$)$ imply that the market for KCP stock was inefficient in $2006?$

a$.$ What would an investor with perfect foresight of the above been willing to pay for KCP at the start of $2006?($Note$$: Because an investor with perfect foresight bears no$$ risk, use a$$ risk$-$free equity cost of capital of $5\mathrm{.}3\%.)$

The present value of the cash flows is $$$ $\_\_\_.($Round to the nearest$$ cent.$)$

b$.$ Does your answer to $($a$)$ imply that the market for KCP stock was inefficient in $2006?($Select all the choices that$$ apply.$)$

a$.$Probably not. In $2006,$ investor expectations were likely very different

long dash.

b$.$KCP might have continued to grow.

c$.$Ex$-$post, the stock is likely to do better or worse than$$ investors' expectations.

d$.$The market would be inefficient only if the stock was underpriced relative to what would have been reasonable expectations in $2006.$

e$.$The market would be inefficient if the stock price was overpriced or underpriced relative to what would have been reasonable expectations in $2006.$