In $2006$ and$2007,$ Kenneth Cole Productions$($KCP$)$ paid annual dividends of $$0\mathrm{.}73.$ In$2008,$ KCP paid an annual dividend of $$0\mathrm{.}39,$ and then paid no further dividends through $2012.$ Suppose KCP was acquired at the end of $2012$ for $$14\mathrm{.}62$ 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 $4\mathrm{.}8\%.)$

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

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Part $1$

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 $4\mathrm{.}8\%.)$

The present value of the cash flows is $$$enter your response here. $($Round to the nearest$$ cent.$)$

Part $2$

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$$KCP might have continued to grow.

B$.$

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

C$.$

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

D$.$

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