1. You are charged with the valuation of DMH Enterprises given the following information: DMH is expected to pay $1.50 at year-end, and dividend growth is expected to be 20% over the next three years, after which growth will taper to a constant rate of 8%. If DMHs beta is 1.25, the yield on Treasury bonds is 1% and the expected return on the market is 13%, what should be the stocks current price?

2. A friend recommends that you purchase stock in HiTech Inc. because at a price of $10, it is significantly undervalued in the market. Given the recommendation, you investigate for yourself you find that: Due to a high rate of earnings growth, HiTech Incs dividends are expected to grow at a rate of 40% a year for the next 2 years and then level out to a permanent 10% a year. The stock has a beta of 1.75, the risk-free rate of return is 2%, and the expected return on the market is 12%. If HiTech Inc recently paid a dividend of $0.80, do you agree with your friend that it is undervalued?

3.

Pietro Enterprises: Balance Sheet Assets Cash Accounts Receivable Inventory Marketable Securities Total Current Assets Net Property, Plant, and Equipment Total Assets Liabilities and Equity Accounts Payable Notes Payable Accruals Total Current Liabilities Long-term Bonds Total Liabilities Common Stock Retained Earnings Total Liabilities \& Stockholders' Equity \begin{tabular}{rr} 2022 & 2021 \\ \hline 9,900 & 8,400 \\ 6,500 & 4,200 \\ 14,500 & 12,600 \\ 3,400 & 3,800 \\ 34,300 & 29,000 \\ 350,000 & 325,000 \\ 384,300 & 354,000 \end{tabular} 14,50022,8008,90046,20052,00098,20030,000256,100384,30012,90018,0007,50038,40047,00085,40030,000238,600354,000 (a)Calculate \& interpret Pietro Enterprises' free cash flow in 2022. (b) Calculate the current value of the corporation if Pietro's management expects free cash flow to grow at a rate of 20% for the next 2 years and then settle to a permanent growth rate of 8%, and the company's cost of capital is 10%