Assume that the average firm in your company’s industry is expected to grow at a constant rate of 6% 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) = D 0 (1.50) this year and 25% the following year, after which growth should return to the 6% industry average. If the last dividend paid (D0) was $1, what is the estimated value per share of your firms stock?

About the approximate forward exchange rate : Assume the current U.S. dollar-British spot rate is 0.6134£/$. If the current nominal one-year interest rate in the U.S. is 2.5% and the comparable rate in Britain is 3.5%, what is the approximate forward exchange rate for 360 days? |

Compute the percentage growth in net sales : Compute the percentage growth in net sales for each product line from fiscal year 2010 to 2011. Round percents to one decimal. |

Statement relevant cash flows : In a financial decision, what is meant by the statement “Relevant Cash Flows”? How do you assure cash flows are relevant? |

Price of loans of equivalent risk and maturity increases : A $500,000 loan requires monthly payments for 20 years. The annual interest rate on the loan is 3%. Immediately after the loan has been finalized, the price of loans of equivalent risk and maturity increases by 50 basis points (3.0% to 3.5%). How muc.. |

What is estimated value per share of your firms stock : Assume that the average firm in your company’s industry is expected to grow at a constant rate of 6% and that its dividend yield is 7%. Your company is about as risky as the average firm in the industry, what is the estimated value per share of your .. |

Suppose your firm is considering two mutually exclusive : Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 10 percent. Project A s Cash flow from year 0 to year 3: -1000, 400, 40.. |

Multinational firm has forecast the euro and dollar rate : A major U.S. multinational firm has forecast the euro/dollar rate to be euro 1.10/$ one year hence, and an exchange rate of $1.40 for the British pound (£) in the same time period. What does this imply the company's expected rate for the euro per pou.. |

What is the net effect on firms cash flow from changes : What is the net effect on a firm's cash flow from changes in NET WORKING CAPITAL if a new project requires: $30,000 increase in inventory, $10,000 increase in accounts receivable, and a $20,000 increase in accounts payable? |

Compute the npv if the cost of capital : If project B has the cash flow timeline as: Year 0 $-100, Year 1 $75, Year 2 $100, Year 3 $300, Year 4 $75, Year 5 $200. Compute the NPV if the cost of capital is 11%. |

## What is the firms required rate of returnCooley Company's stock has a beta of 1.40, the risk-free rate is 4.25%, and the market risk premium is 5.50%. What is the firm's required rate of return? |

## Dividends are expected to grow at a constant rateThe Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Investors require a return of 11 percent on the company's stock. What .. |

## What is the price of a call option with same strike priceA put option is currently selling for $5.70. It has a strike price of $50 and seven months to maturity. The current stock price is $57. The risk-free rate is 4.6 percent, and the stock will pay a $2.70 dividend in two months. What is the price of a c.. |

## Coin collection containsYour coin collection contains 52 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2062, assuming they appreciate at an annual rate of 4.3 perce.. |

## Define investment bankers expect to exercise the optionThe investment bankers expect to exercise the option and purchase the 300,000 shares in exactly one year, when the stock price is fore-casted to be $4.50 per share. However, there is a chance that the stock price will actually be $10.00 per share .. |

## Present value and multiple cash flowsPresent Value and Multiple Cash Flows [LO1] Wainright Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? .. |

## Considering the replacement of its oldCoiner Clothes Inc. is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: (a) Machine 190-3, which has a cost of $190,000, a 3-year expected life, and after-tax cash flows (labor savings and depr.. |

## Should the company replace the furnitureA medium size consulting engineering firm is trying to decide whether it should replace its office furniture now or wait and do it 1 year from now. If the firm does it now, the cost will be $14,500. If it waits 1 year, the cost is expected to be $ 16.. |

## Retirement goalSharon Frances Oliver estimates that she needs 10,000 per year to retire in 25 years. She expects to get 4% in her investment account. She expects to need the cash flows for 20 years until she dies. How much will she need to invest per year to reach .. |

## Compute the covariance of the two return seriesWhich one is more risky Intel or GE? Compute the covariance of the two return series. Compute the correlation coefficient of the two return series. |

## What is the compound future valueAmy Parker a 22 year old Naval Architect is quick to admit that she does not plan to keep close tabs on her 401k. Amys contribution plus that of her employer, amounts to $2200 per year starting at the age of 23. Amy expects this amount will increase .. |

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