Using the information in exhibit 7.4 for NewFangled Sports Products, Inc., calculate the new NPV of a share of stock if the perpetual growth rate doubled from 4% to 8%. Additionally, if the terminal year dividend payment went from $1.40 to $2.80, what is the new share price? (You are required to include your calculation and explanation for your answer in order to receive full points)

ABCDEF 2 NewFangled Sports Products, Inc. 3 Valuation of Stack Valne of Stock Based on Dividend Payments Projected FYE FYE Carrent Year FYE CY+1 FYE CY 3 FYE CY 4 T 10 CY 2 12 13 14 Expected Dividend Payment l'er Share $1.00$1.20 $1.15 S1.30 2 Discount Period in Years 0.00 1.00 2.00 Discount Factor Discount Rate Perpetual Growth Rate Teminal Value 10000 089930 80870727065400654 16 17 18 19 20 21 11.2% 4.0% $19.44 Present Value-Cash Flow/Terninal Value $1.00 $0.99 $0.33 S0.570 85$12.72 so.85 Net Present Value $17.36 27 28 Retlects end-ot-year discounting convention Based upon the Cost of Equity Capital as reported in bbotson's Cost of Capital Yearbook (data tduough June 2012) foe SIC 3549 : Based ulon estimated long term cash flow growth rate of the economy ugeneral, 30 31