(For this part, you MUST present sufficient solution steps, and MUST apply specific Excel functions =NPV(), =IRR(), =AVERAGE(), =YIELD()

Case Three (16 pts)

We are given the information that Microthins stock price was $21 in December 2015, $29 in December 2016, $27 in December 2017, $20 in December 2018, and $26 in December 2019. It also pays annual dividend amounts varying from 2015 through 2019.

Let's assume you do the following transactions:

a) In the end of December 2015: buy 30,000 Microthin shares;

b) In the end of December 2016: collect the dividends ($0.39 per share) on your shares, and then sell 10,000 shares;

c) In the end of December 2017: collect the dividends ($0.43 per share) on your remaining shares, and then buy another 15,000 shares;

d) In the end of December 2018: collect the dividends ($0.50 per share) on your remaining shares, and then sell another 10,000 shares.

e) In the end of December 2019: collect the dividends ($0.52 per share) on your remaining shares, and then sell all your remaining shares.

Q1: What should be the IRR during the "December 2015 December 2019" period for your Microthin stock investment?

Q2: The year-by-year annual returns after the World War II are provided on the provided Excel answer sheet, the tab Case 3. Use =AVERAGE function to compute the post-WW2 1946-2019 average return for S&P stock market index (Rm) and for US risk-free T-bill (Rf), respectively. With such Rm and Rf amounts, and if Microthins stock beta = 1.25 (based on the period of 1946-2019), what shall be the required return amount on Microthin stock if you apply the CAPM formula?

Q3: Based on your answers to Q1 and Q2, and apply both NPV and IRR rules, has your Microthin stock investment over the "Dec 2015 Dec 2019 period been good or bad?