Question: PLEASE ANSWER BOTH!!! I NEED IT AND WILL UPVOTE. Media Music Inc is expected to pay an annual dividend next year of $6.25 a share,

PLEASE ANSWER BOTH!!! I NEED IT AND WILL UPVOTE.

  1. Media Music Inc is expected to pay an annual dividend next year of $6.25 a share, a dividend in Year 2 of $6.63, a dividend in Year 3 of $7.02, a dividend in Year 4 of $7.44, and a dividend in Year 5 of $7.89. Thereafter dividends are expected to grow at a constant rate of 2.35 percent annually. What is the price of Media Music stock given a required return of 12.5 percent.

    A.

    $55.83
    B.

    $68.90
    C.

    $57.47
    D.

    $72.55
    E.

    $64.55

  2. Stock X has an expected return of 9.9% and a beta of 0.6. Stock Y has an expected return of 12.7% and a beta of 1.3. Stock Z has an expected return of 14.9% and a beta of 1.7. The market risk premium is 8% and the risk-free rate is 3%. Which of the following statements is true?

    .

    A.

    Stock X is underpriced, Stock Y is fairly priced, Stock Z is overpriced.

    B.

    Stock X is underpriced, Stock Y is overpriced, Stock Z is overpriced.

    C.

    Stock X is fairly priced, Stock Y is underpriced, Stock Z is overpriced.
    D.

    Stock X is fairly priced, Stock Y is overpriced, Stock Z is underpriced.

    E.

    Stock X is overpriced, Stock Y is underpriced, Stock Z is fairly priced.

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