you plan to buy a share of xyz stock today. You do not expect a dividend at the end of year 1, bout you expect a dividend of $9.25 at the end of year 2, $7.00 at the end of year 3, and $5.00 at the end of year 4. In additon, you expect to sell the stock for $150 immediately after you recieve the dividend at the end of year 2. If your requiered rate of return is 16% a year, how much should you pay for this stock today?

Variable rate cd’s = $90 treasury bills = $150 discount loans = $20 treasury notes = $100 fixed rate cds = $160 money market deposit accts. = $140 savings deposits = $90 fed funds borrowing = $40 variable rate mortgage loans $140 demand deposits = $40 primary reserves = $50 fixed rate loans = $210 fed funds lending = $50 equity capital = $120 a. develop a balance sheet from the above data. be sure to divide your balance sheet into rate-sensitive assets and liabilities as we did in class and in the examples. b. perform a standard gap analysis and a duration analysis using the above data if you have a 1.15% decrease in interest rates and an average duration of assets of 5.4 years and an average duration of liabilities of 3.8 years. c. indicate if this bank will remain solvent after the valuation changes. if so, indicate the new level of equity capital after the valuation changes. if not, indicate the amount of the shortage in equity capital.