SECTION B (50 Marks) Question 1 (20 marks) a What does the beta of a stock measure? A stock has expected return of 11 %, its beta is 0.85 and risk free rate is 4.5%. What must the expected return on market be? (5 marks) b. Golden Web is an Agribusiness company in Kumasi and has been in business only a few years. Its board of directors decided to start paying a dividend to help boost the attractiveness of its stock. The dividend will be C0.50 per share next year. After that dividend will increase by 4 percent per year. The company has a beta of 1.6. The market rate of return is 8% and the T-bill rate is 3%. Should you purchase shares in this firm at the current market price of C6.98 per share? (8 marks) The common stock of ETI, is currently selling for C40 a share. A dividend of C2.00 per share was just paid. You are estimating that this dividend will grow at a constant rate of 10%. (i) Using the constant growth DVM model, what is your required rate of return if C40 is a reasonable trading price? (Show all work.) (4 mark) (ii) IFETI is a new company that produces a relatively unknown product, is the constant growth model a good valuation method for a potential investor to use? Justify your answer. (3 mark) tion 2 ( Case Study, 30 marks) fully read the Case titled; Zeta Mining: Walking The Dragline attached and answer the questions below. What is the NPV of both "Walking the Dragline" and "Employing Contractors" (18 marks) f you were Horwil, what recommendation will you give to the CFO. (8 marks) at other factors do you think the CFO should consider when making her final decision (Ide only four) (4 marks