Use the following information about MSFT@ in your calculations to questions $6,7,8$ and $9.$

$[3$ marks$]$ Assume that you use the following model to predict ARR for $2024,$ ARR $(t+1)=$

${0\mathrm{.}87}^{***}$ARR$(t).$ If the long$-$term constant growth rate is $3\%,$ the cost of equity is $5\%$ and the cost

of debt is $4\mathrm{.}5\%,$ what is the value of equity of MSFT@$?$ Use a residual earnings approach.

A$.1,605$

B$.1,100$

C$.1,785$

D$.2,710$

E$.$ None of the above.

$[3$ marks$]$ By how much will your estimate of the value of equity of MSFT@ change if

MSFT@ had overstated its $2023$ revenue by $11$ mill?

A$.400$

B$.670$

C$.756$

D$.807$

E$.$ None of the above.