a) Assuming a perpetual growth rate of 3%, calculate the value per share of Knead stock on 12/31/18 using the constant-growth model and the capital asset pricing model:

b) Calculate the sustainable growth rate of Knead on 12/31/18. 

Answer the questions based on the below financial information for Knead Corp.

Use year-end 12/31/17 balance sheet values:

Table 1 Year-end Balance Sheets (S millions) 2018 13.00 30.00 209.06 252.06 Cash Accounts receivable Inventory Current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets Accounts payable Notes payable Current portion of long-term debt Current liabilities Long-term debt Total liabilities Common stock Retained earnings Total shareholder equity Operating profit Gain on sale EBITDA Depreciation and amortization 474.47 (154.17) 320.30 572.36 EBIT Interest Income tax expense Net income 25.05 0.00 0.00 25.05 240.00 265.05 160.00 147.31 307.31 2017 5.87 27.00 189.06 221.93 409.47 (90.00) 319.47 541.40 26.05 0.00 0.00 26.05 Total liabilities and shareholders equity 572.36 Table 2 Income Statement December 31, 2018 ($ millions) Revenue Total operating expenses 245.00 271.05 150.00 120.35 270.35 541.40 300.80 (173.74) 127.06 4.00 131.06 (71.17) 59.89 (16.80) (12.93) 30.16