1. Anderson Corporation expects to generate free-cash flows of $500,000 per year for the next five years. Beyond that time, free cash flows are expected to grow at a constant rate of 6 percent per year forever. If the firm's average cost of capital is 15 percent, the market value of the firm's debt is $600,000, and Anderson has a half million shares of stock outstanding, what is the value of Anderson's stock?
2. A common stock currently has a beta of 1.7, the risk-free rate is 7 percent annually, and the market return is 12 percent annually. The stock is expected to generate a constant dividend of $5.70 per share. A pending lawsuit has just been dismissed and the beta of the stock drops to 1.4. The new equilibrium price of the stock will be
3. ART Company just paid a dividend of $2.00. The dividend is expected to grow by 8% this year, 7% in year two and 6% in year three. Then, beginning in year four, the dividend will begin growing at a constant rate of 4%. With a required return of 10%, what is the stock worth today?