Question: please answer a and b for a good rating Compost Science inc. (CS0 is in the business of converting Boston's sewage sludge into fertilizer. The

please answer a and b for a good rating
please answer a and b for a good rating Compost Science inc.

Compost Science inc. (CS0 is in the business of converting Boston's sewage sludge into fertilizer. The business is not in itself very profitable. However, to induce CSI to remain in business, the Metropolitan District Commission (MDC) has agreed to pay whatever amount is necessary to yield CSI a 15% book return on equity. At the end of the year, CSI is expected to pay a $4 dividend. it has been reinvesting 30% of earnings and growing at 4% a year. a-1. Suppose CSI continues on this growth trend. What is the expected long-run rate of return from purchasing the stock at $100 ? (Do not round intermediate calculations. Enter your answer as a percent rounded to the nearest whole number.) a-2. What part of the $100 price is attibutable to the present value of growth opportunities? (Do not round intermediate caiculations. Round your answer to 2 decimal places.) b. Now the MOC announces a plan for CSI to treat Cambridge sewage. CSI's plant will, therefore, be expanded gradually over five yeors. This means that CSt wil have to reinwest 603 of its earnings for five years. Starting in year 6 , howevee, it will again be able to pay out 70 k of eornings. What wal be CSis stock price once this arinouncement is made and its consequences far CSt are knewn? 'Do not round intermediate caleulations. Round your answer to 2 decimal ploces.)

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