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1. Lunch Trucks, Inc. just paid a dividend of $2.00. Dividends are expected to grow at a rate of 3% per year from here on out. If the risk-free rate is 2%, the MRP is 8%, and Temple Lunch Trucks’ stock is only 40% as risky as the market, what is the most that you should be willing to pay for a share of this stock today?
A. $147.14
B. $142.86
C. $90.91
D. $93.64
2. Jones Company preferred stock is expected to pay a dividend of $1.75 per share. If your required rate of return is 7%, what is the most that you should be willing to pay for a share of Jones’ preferred stock today?
A. $25.00
B. $17.50
C. $1.87
D. $26.88
3. Apple, Inc. just paid a dividend of $2.75 a share. Dividends are expected to grow at a rate of 8% per year for the next four years and then at a rate of 3% thereafter. If your required rate of return is 6%, what is the most that you should be willing to pay for a share of Apple stock today?
A. $107.16
B. $113.24
C. $130.85
D. $134.31
(Calculating operating cash flows) assume that a new project will annually generate revenues of $ 2,600,000. Cash expenses including both fixed and variable costs will be $ 500,000, and depreciation will increase by $ 180,000 per year. In addition, l..
How do financial systems affect the innovation capabilities of firms? Compare two institutionally contrasting countries in your answer.
Portfolio Return Year-to-date, Company O had earned a -2.80 percent return. During the same time period, Company V earned 8.7 percent and Company M earned 6.95 percent. If you have a portfolio made up of 10 percent Company O, 20 percent Company V, an..
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The staff of Jefferson Medical Services has estimated the following net cash flows for a food services operation that it may open in its outpatient clinic: What are the worst case and best case IRRs? The worst case and best NPVs?
Jeff Perez deposits $2,000 each year in a tax-deferred retirement account. If he is in a 27 percent tax bracket, by what amount would his taxes be reduced over a 20 year time period?
Terrier Company is in a 35 percent tax bracket and has a bond outstanding that yields 9 percent to maturity. What is Terrier's after tax cost of debt? Assume that the yield on the bond goes down by 1 percentage point, and due tom tax reform. the corp..
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