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Case 3 (valuation of shares, 2.00 points) You are considering purchasing the stock of a company ABC that promises to pay exactly one year from now a dividend per share (DPS) in amount of 5.40 USD; it is expected that DPS of that company will increase 2.00% a year. At the same time other public company XYZ, which is a direct competitor of ABC, announced it would pay every year for next 10 years a constant dividend per share which is higher than that of the company ABC. However, starting from 11th year DPS of the company XYZ will be 1 USD and this will not increase. Taking into account that your required rate of return is 14% and both stocks are traded at the same market price what should be the amount of DPS paid by the company XYZ during years 1-10? Case 4 (extra credit assignment, 1 point) A family consists of a husband, a wife and their two sons. In 2020 the husband's income made up ys of the total family income. The older son's income made up ys the sum of his father and his mother incomes; the younger son had no income as he was a student. In 2021 the husband's income dropped by 25%, the mother's income increased by 50%, the income of the older son increased by 20%; the younger son entered the job market and earned half of his older brother income. How did the family total income change in 2021 compared with 2020 (in percentage terms)? 1 Case 3 (valuation of shares, 2.00 points) You are considering purchasing the stock of a company ABC that promises to pay exactly one year from now a dividend per share (DPS) in amount of 5.40 USD; it is expected that DPS of that company will increase 2.00% a year. At the same time other public company XYZ, which is a direct competitor of ABC, announced it would pay every year for next 10 years a constant dividend per share which is higher than that of the company ABC. However, starting from 11th year DPS of the company XYZ will be 1 USD and this will not increase. Taking into account that your required rate of return is 14% and both stocks are traded at the same market price what should be the amount of DPS paid by the company XYZ during years 1-10? Case 4 (extra credit assignment, 1 point) A family consists of a husband, a wife and their two sons. In 2020 the husband's income made up ys of the total family income. The older son's income made up ys the sum of his father and his mother incomes; the younger son had no income as he was a student. In 2021 the husband's income dropped by 25%, the mother's income increased by 50%, the income of the older son increased by 20%; the younger son entered the job market and earned half of his older brother income. How did the family total income change in 2021 compared with 2020 (in percentage terms)? 1