A stock’s last dividend was $2.12 per share and the dividends are expected to grow forever at a constant rate of 4.7% per year. The risk-free interest rate is 3.6% per year and the market risk premium is 7.1% per year. If the stock’s current price is $12.56 per share, what is the stock’s intrinsic value per share expected to be in five years?

The common stock and debt of northern sludge are valued at $65 million and $35 million, respectively. investors currently require a return of 15.9% on the common stock and a return of 7.8% on the debt. if northern sludge issues an additional $14 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? assume that the change in capital structure does not affect the interest rate on northern’s debt and that there are no taxes.