Show all work and explain your answers clearly

1. You have been given the following projections (expectations) for Cali Corporation for the coming

year:

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Sales = 10,000 units

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Sales price per unit = $10

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Variable Cost per unit = $5

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Fixed Costs = $10,000

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Bonds outstanding = $15,000

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Interest rate on outstanding bonds = 8%

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Tax Rate = 40%

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Shares of common stock outstanding = 10,000 shares

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Beta = 1.4

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Riskfree Rate = 5%

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Market Return = 9%

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Dividend Payout Ratio = 60%

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Growth Rate = 8%

If the current stock price of Cali is $42 , is this a good buy?

3 pts . Show ALL work

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2. Stewart Industries expects to pay a $3.00 per share dividend on its common stock at the end of the year

(D1 = $3.00). The dividend is expected to grow 25 percent a year until t = 3, after which time the dividend

is expected to grow at a constant rate of 5 percent a year. The stock's beta is 1.2, the risk-free rate of

interest is 6 percent, and the market rate of return is 11 percent. What is the company's current stock

price?

2pts. Show all work and clearly explain your answer PLEASE