Finance

1. Suppose the company is expected to pay a divided of $2.5 and the required rate of return is 10% and the growth rate is 4%. What is the price of the stock after 5 years? after 10 years? after 12 years?2. Suppose the company just paid a divided of $2.5 and the required rate of return is 10% and the growth rate is 4%.

What is the price of the stock after 5 years? after 10 years? after 12 years?3. ABC’s stock is currently selling for $60 per share. The firm is expected to pay a dividend of $3.60. If the cost of equity is 9%, compute the growth rate.

1 Suppose that you bought a 14% Drexler bond with time to maturity of 9 years for $1,37975 (semiannual coupons, interest rate=8%) After another ½ year, you sold the bond

a Assuming that the required rate of return remained at 8%, what would the selling price be? What is the rate of return from this investment?

b Assuming that the required rate of return decreased to 75%, what would the selling price be? What is the rate of return from this investment?

 

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