QUESTION 1
Beta Corp has an ROE of 15%; has just paid a dividend of $1.50; they pays 10% of its earnings out in dividends; and the appropriate discount rate is 20%. What is the current stock price?

QUESTION 2
You are planning your retirement and you come to the conclusion that you need to have saved $1,250,000 in 30 years. You can invest into an retirement account that guarantees you a 5% annual return. How much do you have to put into your account at the end of each year to reach your retirement goal?

QUESTION 5
You buy a house for $220,000 in a neighborhood where home prices have risen 5% annually on average. You suspect that growth in home prices will slow to an average of 3.5% per year over the next five years. If your growth estimate of 3.5% growth is correct, how much less will your house be worth in five years compared with 5% growth?

QUESTION 6
A report from the marketing department indicates that a new product will generate the following revenue stream: $62,500 in the first year, $89,400 in year two, $136,200 in year three, $128,300 in year four, and $112,000 in year five. If your firm's discount rate is 11% and the cash flows are received at the end of each year, what is the present value of this cash flow stream

QUESTION 9
Consider the following details for a bond issued by Bravo Incorporated:
Issue Date 8/5/2000
Maturity Date 8/5/2030
Annual Coupon Rate (ANNUAL coupons) 9%
Face Value $1,000
Suppose that today’s date is 8/5/2004. What should the current trading price be for this bond if investors want a 12% ANNUAL return

QUESTION 10
Bavarian Sausage’s enterprise value is $75,000,000, the market value of its debt is $23,000,000 and the market value of its preferred stock is $5,000,000. If the company has 3,500,000 shares outstanding, what should be Bavarian Sausage’s stock price?

QUESTION 12
A one-year bond offers a yield of 6% and a two year bond offers a yield of 7.5%. Under the expectations theory what should be the yield on a one year bond next year?

QUESTION 1 Beta Corp has an ROE of 15%; has just paid a dividend o...