solution

If D₁ = $1.80, g (which is constant) = 4.7%, and P₀ = $28.00, then what is the stock’s expected dividend yield for the coming year?

a. 6.73%

b. 6.14%

c. 6.04%

d. 6.87%

e. 6.43%

Wall Inc. forecasts that it will have the free cash flows (in millions) shown below. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 15% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the firm’s total corporate value, in millions? Do not round intermediate calculations.

Year	1	2	3
Free cash flow	-$20.00	$48.00	$51.84

a. $880.41 million

b. $740.57 million

c. $581.15 million

d. $578.88 million

e. $508.88 million