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Suppose all possible investment opportunities in the world are limited to the four stocks list in the table below: Stock Share Price Shares Outsanding (million)

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Suppose all possible investment opportunities in the world are limited to the four stocks list in the table below: Stock Share Price Shares Outsanding (million) Taggart Transcontinental $12.02 31 Rearden Metal $14.24 46 Wyatt Oil $29.25 10 Nielson Motors $17.98 24 The weight on Taggart Transcontinental stock in the market portfolio is closest to: O a. 23.24% O b. 25.00% O c. 21.27% O d. 22.18% O e. 23.87% Shirley's Sandwiches expects earnings per share of this year (at t=1) of $18.73. The company has a large number of good projects and plans to reinvest all earnings with a return on new investment of 15.4%. This will continue until t=8. At that point, the firm expects to have fewer good projects. It will, therefore, begin paying a dividend of 28% of earnings (the first payment at t=8), with all remaining earnings reinvested with a return on new investment of 7.1%. The payout ratio and return on new investment is expect to stay constant forever. If Shirley's cost of equity capital is 14.4%, what is the current price of the stock? O a. $56.23 O b. $53.74 O c. $51.67 O d. $58.21 O e. $60.01

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