1016 words - 5 pages

1) Assume that the average firm in your company's industry is expected to grow at a constant rate of 4% and that its dividend yield is 7%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 50% [D1 = D0(1 + g) = D0(1.50)] this year and 30% the following year, after which growth should return to the 4% industry average. If the last dividend paid (D0) was $2.75, what is the value per share of your firm's stock? Round your answer to the nearest cent. Do not round your intermediate computations.

2) The Moore Corporation had operating ...view middle of the document...

The trees can be harvested in 14 years, at which time W-P plans to sell the forest at an expected price of $10 million. What is W-P's expected rate of return? Round your answer to two decimal places.

7) While Mary Corens was a student at the University of Tennessee, she borrowed $12,000 in student loans at an annual interest rate of 9.10%. If Mary repays $1,500 per year, how long (to the nearest year) will it take her to repay the loan?

8) Wilson Wonders's bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 7%. The bonds sell at a price of $985. What is their yield to maturity? Round your answer to two decimal places.

9) The current price of a stock is $33, and the annual risk-free rate is 5%. A call option with a strike price of $32 and 1 year until expiration has a current value of $6.00. What is the value of a put option written on the stock with the same exercise price and expiration date as the call option? Round your answer to the nearest cent.

10) Needham Pharmaceuticals has a profit margin of 4% and an equity multiplier of 1.6. Its sales are $90 million and it has total assets of $40 million. What is its ROE? Round your answer to two decimal places.

11) Thress Industries just paid a dividend of $4.00 a share (i.e., D0 = 4.00). The dividend is expected to grow 9% a year for the next 3 years and then at 13% a year thereafter. What is the expected dividend per share for each of the next 5 years? Round your answers to the nearest cent.

a. D1 = $

b. D2 = $

c. D3 = $

d. D4 = $

e. D5 = $

12) Pearson Brothers recently reported an EBITDA of $7.0 million and net income of $1.75...

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