Please provide detail answer for below questions (Required Excel File)
problem1: The Hart Mountain Company is expected to experience an unusually high growth rate (20%) during the next 3 years. However, in the fourth year the firm is expected to begin growing at a constant long-term growth rate of 8 percent. During the rapid growth period, the firm's dividend payout ratio will be relatively low (20%) in order to conserve funds for reinvestment. However, the decrease in growth in the fourth year will also be accompanied by an increase in the dividend payout to 50%. Last year's earnings were E0 = $2.00 per share and the firm's required return is 10 percent. What should be the current price of the common stock?
[A] $71.54
[B] $61.78
[C] $93.50
[D] $66.50
[E] $87.96
problem2: Heino In hired you as a consultant to help them estimate their cost of capital. You have been provided with the following data: rRF = 5.0%; RPM = 5.0%; and b = 1.1. Based on the CAPM approach, what is the cost of equity from retained earnings?
[A] 10.88%
[B] 11.03%
[C] 11.14%
[D] 10.50%
[E] 10.71%
problem3: The common stock of Anthony Steel has a beta of 1.20. The risk-free rate is 5% and the market risk premium is 6%. Suppose the firm will be able to use retained earnings to fund the equity portion of its capital budget. What is the company's cost of retained earnings, rs?
[A] 11.0%
[B] 12.2%
[C] 12.4%
[D] 7.0%
[E] 7.2%
problem4: Holmgren Hotels' stock has a required return of 11 percent. The stock currently does not pay a dividend but it expects to begin paying a dividend of $1.00 per share starting five years from today ($1.00). Once established the dividend is expected to grow by 25% per year for two years, after which time it is expected to grow at a constant rate of 10 percent per year. What should be Holmgren's stock price today?
[A] $84.80
[B] $ 174.34
[C] $ 76.60
[D] $ 94.13
[D] $ 77.27
problem5: Rhino In hired you as a consultant to help them estimate their cost of capital. You have been provided with the following data: D1 = $1.30; P0 = $40.00; and g = 7% (constant). Based on the DCF approach, what is the cost of equity from retained earnings?
[A] 9.66%
[B] 9.84%
[C] 9.97%
[D] 10.08%
[E] 10.25%