Problem 6: An analyst knows with certainty that Skipper Inc. will exist for two years and have the following cash flows per share: Revenue Costs Net cash flow Year 1 $100 $ 80 $ 20 Year 2 $100 $ 80 $ 20 a) Find Skipper Inc.'s stock price if their opportunity cost of capital is 8 percent. The analyst realizes that Skipper Inc.'s costs may not be $80 per share with certainty. Instead, each year there is a 10 percent chance that a worker will be seriously injured and that Skipper will have to pay the employee's medical expenses and lost wages. If an injury occurs, Skipper's costs equal $89 per share. If an injury does not occur, then Skipper's costs equal $79 per share. b) What is Skipper's expected net cash flow in each year? What is its stock price? Provide an argument for why the opportunity cost of capital should not change because of the risk of worker injury Skipper Inc. now purchases workers' compensation insurance to cover the costs of medical expenses and lost wages. The premium for full coverage is $1 per share in each of the two years. c) What is Skipper Inc.'s stock price once the insurance is in place? Compare your answer to b) and explain the intuition behind your finding. d) Now assume that the insurer charges a 20% loading. How does the loading af- fect Skipper Inc.'s stock price? Provide the intuition behind your result