You own some shares in Bigcorp Inc. You are looking at the stock quotation page of todays Globe and Mail Report on Business.

___52 Weeks_ Yield Volume ___Last Days Trading

Hi Lo Stock Sym Div % P/E 100s Hi Lo Close Chg.

126.25 72.50 Bigcorp BCI 1.30 1.32 16 20,925 99.38 97.88 98.48 -.12

From this information you see that the latest dividend paid by Bigcorp was $1.30 per share and the closing price of the stock on the TSX yesterday was $98.48. Based on the companys dividend history and what you believe about its future prospects, you expect this dividend will grow at 5% annually for the foreseeable future.

By using some of the analytical tools we have been practicing in class to value Bigcorp stock, you are trying to decide whether to buy more shares of Bigcorp or sell the ones you already own. You require a 7% return on your investment in Bigcorp stock.

Use the space below to answer these 2 questions.

1. Do you think that the stock is currently over-valued, undervalued, fairly priced on the market or that you cant tell without further information? Show your work to justify your answer and allow part marks where appropriate.
2. Based on your analysis in 1. above, would you buy more shares of Bigcorp, sell the ones you already own or neithe