Save & Exit Submit value 20.00 points Mexican Motors' market cap is 200 billion pesos. Next year's free cash flow is 10.1 billion pesos. Security analysts are forecasting that free cash flow will grow by 9.1% per year for the next five years. a. Assume that the 9.1% growth rate is expected to continue forever. What rate of return are investors expecting? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Rate of return b-1. Mexican Motors has generally earned about 14% on book equity (ROE -14%) and reinvested 50% of earnings. The remaining 50% of earnings has gone to free cash flow. Suppose the company maintains the same ROE and investment rate for the long run What will be the growth rate of earnings? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Growth rate b-2. What would be the rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Rate of return References eBook & Resources Worksheet Difficulty Intermediate 9:14 PM Question 5 (of 5) Save & Exit Submit value 20.00 points Portfolio managers are frequently paid a proportion of the funds under management Suppose you manage a $110 million equity portfolio offering a dividend yield (DIV / Pa) of 60%. Dividends and portfolio value are expected to grow at a constant rate. Your annual fee for managing this portfolio is 60% of portfolio value and is calculated at the end of each year. a. Assuming that you will continue to manage the portfolio from now to eternity, what is the present value of the management contract? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value million b. What would the contract value be if you invested in stocks with a 5.0% yield? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Contract value $ million References eBook & Resources Worksheet Difficulty Challenge 0 9 :14 PM