Reference no: EM132771474
Questions -
Q1. A company just announced that they are increasing their annual dividend to $1.60 and establishing a policy whereby the dividend will increase by 3.5 percent annually thereafter. How much will one (1) share of this stock be worth five (5) years from now if the required rate of return is 12 percent?
a. $23.14
b. $21.60
c. $24.79
d. $22.36
e. $23.95
Q2. You borrow $5,600 to buy a car. The terms of the loan call for monthly payments for four (4) years at a 5.9 percent annual rate of interest. What is the amount of each payment?
a. $103.73
b. $131.26
c. $130.62
d. $133.04
e. $103.22
Q3. Today you earn a salary of $28,500. What will be your annual salary fifteen (15) years from now if you earn annual raises of 3.5 percent?
a. $47,035.35
b. $48,201.60
c. $48,091.91
d. $47,747.44
e. $47,522.89
Q4. A company is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20 percent a year for the next four (4) years and then decreasing the growth rate to a constant 5 percent per year. The company just paid its annual dividend in the amount of $1.00 per share. What is the current value of one (1) share of this stock if the required rate of return is 9.25 percent?
a. $43.19
b. $45.81
c. $41.05
d. $35.63
e. $38.19
Q5. A company made two (2) announcements concerning their common stock today. First (1st), the company announced that their next annual dividend has been set at $2.16 a share. Second (2nd), the company announced that all future dividends will increase by 4 percent annually. What is the maximum amount you should pay to purchase a share of this company's stock if your goal is to earn a 10 percent rate of return?
a. $34.62
b. $36.00
c. $27.44
d. $22.46
e. $21.60
Q6. You are borrowing money today at an 8 percent annual interest rate. You will repay the principal plus all the interest in one lump sum of $6,500 three (3) years from today. How much are you borrowing?
a. $5,000.00
b. $5,159.91
c. $6,018.52
d. $5,572.70
e. $5,572.70