Answer the following:

(Must show work)

4. Answer the following: A) Illinois Power Company currently pays a dividend of S5 every year. However, the company is in a mature industry and does not expect real growth in the future. Assuming the dividend is expected to remain constant forever and investors demand an 8% return, what is the price for each share of Illinois Power? B) Widgets Inc. is about to make its initial public stock offering. The firm is entirely financed by equity and is expected to have the following free cash flows: Year 1:-50 million, Year 2: -25 million, Year 3:75 million, Year 4: 100 million, Year 5: 150 million. At the end of year five, the firm is expected to grow at 5% per year forever. If investors currently demand a 15% return, what is the value of the firm