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need the anwsers asap Problem 4-20 Two-stage DCF model 28 Compost Science Inc (Sy is in the business of converting Boston's sewage sludge into fertilizer.
need the anwsers asap
Problem 4-20 Two-stage DCF model 28 Compost Science Inc (Sy is in the business of converting Boston's sewage sludge into fertilizer. The business is not in itself very profitable However to induce si to remain in business, the Metropolitan District Commission (MDC) has agreed to pay whatever amount is necessary to yield CSI a 16 book teturn on equity. At the end of the year. CSI is expected to pay a $5 dividend it has been reinvesting 30% of eamings and growing at 3% a year - Suppose est continues on this growth trend. What is the expected long-run rate of return from purchasing the stock at $100? (DO net round intermediate calculations. Enter your answer os a percent rounded to the nearest whole number.) 13700 1-2 What part of the 100 price is attributable to the present value of growth opportunities? (Do not round intermediate calculations. Round your answer to 2 decimal places.) PGO b. Now the MDC announces a plan for Cst to treat Cambridge sewage CSI's plant will, therefore, be expanded gradually over five years. This means that CSI will have to reinvest 60% of its earnings for five years. Starting in year 6, however, it will again be able to pay out 70% of earnings. What will be CS's stock price once this announcement is made and its consequences for CSI are known? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Step by Step Solution
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