Section: Name: 1. (5 Pts) Which one correctly identifies some of the effects of firm's repurchase of shares, holding the net income constant? a. The number of shares outstanding will rise; EPS will fall b. The number of shares outstanding will fall; EPS will fall. c. The number of shares outstanding will rise; EPS will rise. d. The number of shares outstanding will fall; EPS will rise. e. None of the above. 2. (5 Pts) The company ABC just paid $2 dividend per share, which is expected to be constant perpetually. If the investors require 7% returm on similar investments, what is the price of stock today? Please show all your work. 3. (10 Pts) The company ABC just paid $2 dividend per share, which is expected to grow at 5 % indefinitely. If the investors require 7 % return on similar investments, what is the price of stock today? Please show all your work. 4. (5 Pts) In the previous question, will the price be higher or lower if the expected dividend growth rate is higher? Will the price be higher or lower if the required rate of return was higher (assuming 5% growth rate)? 5. (15 Pts) The company ABC just paid $2 dividend per share, which will grow at 15% for the next three dividends. Afterwards, the dividends will level off and grow at 5% per year forever. If the investors require 7% return on similar investments, what is the price of stock today? Please show all your work (on the back for extra space)