Please answer the following questions. You have to show your work to get full credit. 1. Stock Valuation (25 Points). Inc Corporation plans to distribute dividends to its shareholders according to the following schedule: (period 0 is today, period 1 is one year from today etc) Period 1: Give a dividend of $2.00 per share Period 2 to Period 5: The dividend grows at a rate of 3% from the previous year Period 6: Dividend growth slows to 2% and remains fixed at 2% forever. (a) 6 Points. What is the value of each dividend payment from period 2 until (and including) Period 7's dividend? (b) 7 Points. What is the price of Inc corporation's stock today based on the dividend-discount model(call the price Po)? Write down the formula (and plug in for all values that would determine the (per share) price of XYZ's stock today (Po). Assume the required return on the stock is 5%. (NOTE: You have to plug in all relevant information into the formula for full credit. You do not have to find the actual price.) (c) 6 Points. Suppose that instead of dividends an investor who wants to buy Inc corporation wants to find the price of the stock based on the free cash flow method. The company is projected to generate a free cash flow of $50 million next year which is then projected to increase by 3% per year. Suppose that the investor believes that the company will only operate for the next 5 years and then at the end of the fifth year the corporation will default and will no longer be in business. Based on this information, how much would this investor be willing to pay for this stock according to the free cash flow method? Assume that the total number of shares outstanding are 1.1M and the required return on the stock is still 5%. (NOTE: Simply write down the formula that would determine the price that this investor would be willing to pay for this stock). (d) 6 Points. In the midst of the Coronavirus pandemic an investor considers buying stock in either Apple Corporation or Walmart Corporation. Which of these two stocks is likely to offer a higher return in the next 6 months to 1 year. Motivate your answer (Note: The investor has to choose one or the other, he/she can't invest in both stocks)