3. Consider a common stock with the following expected dividends : $2 in one year (i.e., at t=1), $3 in two years (at t-2). $0 in three years (at t=3), $2 in four years (at t=4) and $5 in five years (at t-5). After t-5, the dividends will grow at 10% per year for two years (i.e. t=6 and t-7). After t=7, dividends will grow at 2% per year, forever. The opportunity cost of capital is 12%. You plan to purchase the common stock in three years (... at t-3). What is your expected purchase price at t-3? 1 2. 4. Consider the following one year investments: Investment Cash Flow to Cash Flow, tol - 10,000 +18,000 5,000 + 9,000 5,000 + 5,700 2,000 + 4,000 a. Calculate the NPV and rate of return for each of these investments. The opportunity cost of capital is 20% for all four investments. b. Which investment is most valuable? c. Suppose the firm can only take one of these investments. Which investment should the firm choose? their cash flows