Reference no: EM132467306

Question problem 1: You require a risk premium of 3.5 percent on an investment in a company. The pure rate of interest in the market is 3.25 percent and the inflation premium is 3 percent. US Treasury bills are risk free. What should be the yield of the US Treasury bills? Use multiplicative form.

A.5.58%

B.5.06%

C.5.83%

D.5.32%

E.6.09%

F.6.35%

Question problem 2: The dividend yield of a stock is 7 percent. If the market price of the stock is $18 per share and its dividends have been growing at a constant rate of 6%, what was the most recent dividend paid by the company?

A.$0.85

B.$1.02

C.$1.70

D.$1.53

E.$1.36

F.$1.19

Question problem 3: Last year, Jen and Berry Inc. had sales of $45,000, cost of goods sold (COGS) of 12,000, depreciation charge of $3,000 and selling, general and administrative (SG&A) cost of $10,000. The interest costs were $2,500. Forty percent of SG&A costs are fixed costs. If its sales are expected to be $60,000 this year, what will be the estimated SG&A costs this year?

A.$12,000

B.$12,667

C.$14,250

D.$11,500

E.$10,636

F.$13,250