Reference no: EM133000394

Question 1: A stock paid a dividend today of $10.00. The stock's dividends are expected to grow at a constant rate of 3.5% per year. There are two investors interested in buying the stock, the first considers that the stock has moderate risk and consequently estimates the expected return to be 9.4%. The second deems the stock as a riskier investment and estimates the expected return to be 5.9%. Both investors will only receive a dividend in a year from today. Neither will receive the dividend paid today. If only one investor will buy all the shares available in the market, indicate at which price these shares will be purchased.

Question 2: A mortgage company offered a 4 point discount (4%) to an investor for a payment of $8,000 today. If the monthly payment is $1,664 without the discount and $1,341 with the discount, and the investor personal annual discount rate is 7.2%, calculate the number of years the investor must stay on the property to make taking the discount a sound financial decision.

Questoin 3: A mutual fund has a NAV of $3. If the fund has 4,678,208 shares and liabilities for $352,693, calculate the asset value.