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I need help with the second part of the question! I have calculated the NPV of buying 100 shares, as well as the excess rate of return:

1. 100 x [1.2 (1 + 0.015) / (0.025 0.015)] = $12,180

2. In an efficient financial market, it is impossible to earn an excess return. Therefore, the excess return is equal to 0.

The initial dividends per share of common stock of MM Ltd. are $1.2. The growth rate of the dividends stream is expected to be 1.5% per quarter into indefinite future. The required quarterly rate of return on MM's common stock is 2.5%. Assume efficient financial markets and calculate the net present value of buying 100 shares of the common stock. Also, calculate the excess rate of return on your investment. Assume that right at this moment, MM Ltd. announces a capital project which is expected to raise the quarterly growth rate of earnings stream from 1.5% to 2.0% permanently. Also, due to higher risks of the capital project, the required quarterly rate of return on MM's common stock rises from 2.5% to 2.8% permanently. Suppose that it takes 10 days for the price of common stock to reach to its new intrinsic value after the announcement and on day 1, the price per share rises to $133 only. What is the net present value, NPV, of buying 10,000 shares of the common stock on day 1 and holding that investment for subsequent 9 days? Also, calculate the excess rate of return over the 9-day holding period

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