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1. One year ago, the stock price was $245. Today, the stock price is $257. Over the year, the firm distributed Dividends of $1.25 per share. What is the total return of the stock over the past year?
2. Next year’s annual Dividend is expected to be $4, per share. The long-term growth in dividends is expected to be 3%, indefinitely. The firm’s Beta is 0.95, the Equity Risk Premium is 7.5%, and the risk free rate for the expected duration of the investment is 2.83%. What is the intrinsic value of the stock, per share?
3. Next year’s Dividend, per share, is expected to be $2.50. The current share price is $155. If the market capitalization rate is 14%, then what is the growth rate inspected to be in the future, given as an annualized rate?
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.4 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be wo..
The Inventive Co. is considering a new project. This project requires an initial cash investment of $75,000. The project will generate cash inflows of $24,000 in the first year. Then, the project will do nothing for two years, after which time cash i..
Your firm is contemplating the purchase of a new $542,500 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $48,000 at the end of that time. Working capital will revert b..
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 20 percent, –12 percent, 17 percent, 20 percent, and 10 percent. Suppose the average inflation rate over this period was 1.7 percent and the average T-bi..
Fly Away, Inc., has balance sheet equity of $5.7 million. At the same time, the income statement shows net income of $843,600. The company paid dividends of $459,762 and has 120,000 shares of stock outstanding. If the benchmark PE ratio is 21, what i..
Which of the following motives for holding cash concerns managers’ ability to meet financial obligations when due? Relative to the other cash management models (i.e. Baumol Model and Miller-Orr Model), the Stone model is _______________practical.
If Rose Garden is acquired for $27,000,000, what would be the "going-in" cap rate at that price? How does this compare to cap rates for the comparables?
A firm is anticipated to produce a $10,000 cash flow in year 1, $2,500 cash flows in years 2 through 4, and then will pay a steady stream of $1,250 cash flows into the foreseeable future (i.e. forever). Also, the firm has a weighted average cost of c..
You have just won the lottery and will receive $1,000,000 in one year. You will receive payments for 25 years and the payments will increase by 3.8 percent per year. If the appropriate discount rate is 7.8 percent, what is the present value of your w..
Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. What is the current price of the bonds? By what percent w..
What is the equivalent annual savings from the purchase if Gluon uses straight-line depreciation? Assume the new machine will have no salvage value.
London purchased a piece of real estate last year for $83,500. The real estate is now worth $102,700. If London needs to have a total return of 0.24 during the year, then what is the dollar amount of income that she needed to have to reach her object..
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