Question 1 Aluworks Co. is expected to pay a $21.00 dividend next year. The dividend will decline by 10 percent annually for the following three years. In year 5, Aluworks will sell off assets worth $100 per share. The year 5 dividend, which includes a distribution of some of the proceeds of the asset sale, is expected to be $60. In year 6, the dividend is expected to decrease to $40 and will be maintained at $40 for one additional year. The dividend is then expected to grow by 5 percent annually thereafter. If the required rate of return is 12 percent, what is the value of one share of Aluworks? Question 2 Baggai Enterprises has an ROA of 10 percent, retains 30 percent of earnings, and has an equity multiplier of 1.25. Mondale Enterprises also has an ROA of 10 percent, but it retains two-thirds of earnings and has an equity multiplier of 2.00. 1. What are the sustainable dividend growth rates for (A) Baggai Enterprises and (B) Mondale Enterprises? 2. Identify the drivers of the difference in the sustainable growth rates of Baggai Enterprises and Mondale Enterprises Question 3 (Relative Valuation Approach) Company A's EPS is $1.50. Its closest competitor, Company B, is trading at a P/E of 22. Assume the companies have a similar operating and financial profile. a). If Company A's stock is trading at $37.50, what does that indicate about its value relative to Company B? b). If we assume that Company A's stock should trade at about the same P/E as Company B's stock, what will we estimate as an appropriate price for Company A's stock