Problem #3 Stock valuation (a) Agata Acini de Pepi Cuccina De Casa Mangiara Corporation is a privately held company. The company expects the following free cash flows over the next four years: 2021 2022 2023 2024 $ $ $ $ 177,000 182,310 185,956 191,535 Beyond 2024 the company expects a 2.5% growth rate for cash flows. The company's cost of capital is 6% and there are bonds payable and preferred stock outstanding with valuations amounting to $1,500,000 and $265,000 respectively. There are also 85,000 common shares outstanding, Required: Based on the foregoing information compute the value of a share of Agata Acini de Pepi Cuccina De Casa Magiara Corp. common stock (b) Sana Semolina, Inc. has common stock outstanding on which the following cash dividends per share have been paid over the last six years: 2014 $ 2.50 2015 $ 2.60 2016 $ 2.71 2017 $ 2.81 2018 $ 2.91 2019 $ 3.04 Similar risk investments earn 8.5% Required: What is the most you would be willing to pay per share assuming the growth rate reflected by the above dividend history