Pertama Corporations stock is currently selling for $160.00 per share and the firm's dividends are expected to grow at 5 percent indefinitely. In addition, Pertama Corporations most recent dividend was $5.50. The expected risk free rate of return is 3 percent and the expected market return is 8 percent. Assume that Pertama Corporation has a beta of 1.20.

i. Calculate the expected return based on the dividend valuation model. (4 Marks)

ii. Calculate the required return using the Capital Asset Pricing Model (CAPM)? (4 Marks) iii. Interpret whether Pertama Corporation would be a good investment at this time. (2 Marks)

(b) Matahari Energy Malaysia is considering Project A and Project B, which are two mutually exclusively projects with unequal lives. Project A is an eight-year project that has an initial outlay or cost of $180,000. Its future cash inflows for years 1 through 8 are $38,000. Project B is a six-year project that has an initial outlay or cost of $160,000. Its future cash inflows for years 1 through 6 are the same at $36,000. The company uses the equivalent annual annuity (EAA) method and has a discount rate of 11.50%. Calculate the EAA for both projects. Evaluate which project the company should choose with justifications.