Part 1

Suppose Acap Corporation will pay a dividend of $2.75 per share at the end of thisyear, and $3.05 per share next year. You expectAcap's stock price to be $52.07 in two years. IfAcap's equity cost of capital is 8.8%:

a. What price would you be willing to pay for a share of Acap stocktoday, if you planned to hold the stock for twoyears?

b. Suppose instead you plan to hold the stock for one year. What price would you expect to be able to sell a share of Acap stock for in oneyear?

c. Given your answer in part (b), what price would you be willing to pay for a share of Acap stocktoday, if you planned to hold the stock for oneyear? How does this compare to your answer in part (a)?

Note: It is best not to round intermediate calculations- make sure to carry at least four decimal places in intermediate calculations.

Part 2

Summit Systems will pay a dividend of $1.49 one year from now. If you expectSummit's dividend to grow by 5.7% peryear, what is its price per share if its equity cost of capital is 11.8%?

Part 3

Procter and Gamble(PG) paid an annual dividend of $2.91 in 2018. You expect PG to increase its dividends by 8.1% per year for the next five years(through 2023), and thereafter by 3.1% per year. If the appropriate equity cost of capital for Procter and Gamble is 7.2% peryear, use thedividend-discount model to estimate its value per share at the end of 2018. The price per share is_____ (round to nearest cent)

Part 4

Colgate-Palmolive Company has just paid an annual dividend of $1.09. Analysts are predicting dividends to grow by $0.15 per year over the next five years. Afterthen, Colgate's earnings are expected to grow 6.8% peryear, and its dividend payout rate will remain constant. IfColgate's equity cost of capital is 9.1% peryear, what price does thedividend-discount model predict Colgate stock should sell fortoday?

Part 5

You notice that PepsiCo(PEP) has a stock price of $103.56 and EPS of $6.27. Itscompetitor, theCoca-Cola Company(KO), has EPS of $2.37. Estimate the value of a share ofCoca-Cola stock using only this data.

The value of a share ofCoca-Cola stock is $

Part 6

In addition tofootwear, Kenneth Cole Productions designs and sourceshandbags, apparel, and other accessories. Youdecide, therefore, to consider comparables for KCP outside the footwear industry. You also know the following aboutKCP: it has sales of $518 million, EBITDA of $55.6 million, excess cash of $100 million, $3 million ofdebt, EPS of $1.65, book value of equity of $12.05 pershare, and 21 million shares outstanding.

a. Suppose thatFossil, Inc., has an enterprise value to EBITDA multiple of 1.29 and aP/E multiple of 15.65. What share price would you estimate for KCP using each of thesemultiples, based on the data forKCP?

b. Suppose that Tommy Hilfiger Corporation has an enterprise value to EBITDA multiple of 7.26 and aP/E multiple of 16.58. What share price would you estimate for KCP using each of these multiples based on the data forKCP?