Calculate the price of the stock today if Do is $1.00 and growth is 6%. Assume the required rate of return on common stock, rs, is 10%. $_______(3 pts.)

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Business Finance Stock Test

 

Business Finance “Stocks” Name___________________ 80 points Score__________

 

 

 

MUST SHOW WORK

 

1. Calculate the dividend for year 15 if Do is $2.50 and growth is 6%. D15 = $__________ (3 pts.)

 

2. Calculate the dividend for each year from D1 through D5 assuming Do is $4 and growth is 7%. (10 pts.)

 

D1 = $

 

D2 = $

 

D3 = $

 

D4 = $

 

D5 = $

 

3. Calculate the price of the stock today if Do is $1.00 and growth is 6%. Assume the required rate of return on common stock, rs, is 10%. $_______(3 pts.)

 

 

 

4. If you know that the required rate of return, r, on Stock A is 12%, and the dividend yield is 5%, what is the capital gains yield?_____% (2 pts.)

 

 

 

5. If P1 is $24.61, and Po is $22.97, what is the capital gains yield? ______% (2 pts.)The total return, r, is 15%. What is the dividend yield? ______% (2 pts.)

 

6. If the dividend, D1, is $1.92, and Po is $23.50, what is the dividend yield? ____% If the total rate of return, r, is 14%, what is the capital gains yield? _____% (2 pts. each)

 

7. If the expected rate of return, rˆ, is less than the required rate of return, r, should you buy the stock? Yes — No. Circle your answer. 2 pts.If you already own the stock, should you keep it or sell it? Circle your answer. 2pts.

 

8. The price of preferred stock X is $65.00, and the dividend per share is 7% of the par value of $100. Calculate the required rate of return on the preferred stock, rp. _____% 4 pts.

 

9. If the required rate of return on preferred stock Y with an $8 dividend is 12%, what is the price of the stock? Vp = %___________ 4 pts.

 

10. Stock Z will pay a dividend of $3.00, but forecasts no growth in the dividend. The current price of the stock, Po, is $30. Calculate the required rate of return, rs. 4 pts.

 

11. If the dividend on this no growth stock is $1.15 and rs is 13%, calculate Po. 4 pts.

 

 

 

12. If the growth rate (g) is 6%, the price of the stock today (Po) is $24, the dividend today (Do) is $1.00, what is the dividend yield, the capital gains yield, and the total yield, r, (r = required rate of return or total yield). 6 pts.Dividend Yield ___________% Capital Gains Yield _____________% Total Yield (required rate of return) ______________%

 

13. What is the expected price of Stock C four years from now if growth (g) is 6%, and the investors are requiring 11%, (the required rate of return, r, is 11%), and the current dividend, Do, is $1.75. Calculate expected Pˆ4. 5 pts.

 

14. Suppose the dividend today, Do, is $2.50, and the growth rate (g) is expected to be 25% for the next three years, followed by a normal growth rate (g) of 6% thereafter. Assume the investors require 13%, rs. Calculate the value of the stock today, Po. This is the supernormal growth problem. 25 pts

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An investment opportunity costs $25,000 today, but promises to return $10,000 per year for 3 years, and then $20,000 per year for two more years.

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Capital Budgeting Final Exam

 

Final Exam—Capital Budgeting           Name_______________   Score_________

 

An investment opportunity costs $25,000 today, but promises to return $10,000 per year for 3 years, and then $20,000 per year for two more years.  What is the payback period?  Show work on this page.

 

 

 

Project A and Project B have a cost of $24,000,000 today.  Project A will have cash flows of $10,000,000 per year for three years, while Project B will have cash flowsof $15,000,000 the first year, $10,000,000 the second year, and $7,000,000 the third year. 

 

Calculate the NPV and the IRR for Project A using a 12% cost of capital and show your work by using TWO of the following methods:  (1) using the formula, (2) identifying all variables using the calculator’s function keys, (3) using the steps on the calculator to calculate NPV and IRR.  Note it is an annuity since the cash flows are the same.

 

 

 

 

 

 

 

 

 

 

 

Calculate the NPV and the IRR for Project B using a 12% cost of capital and show your work by using TWO of the following methods:  (1) using the formula,(2) identifying all variables using the calculator’s function keys, (3) using the steps on thecalculator to calculate NPV and IRR.Note this project has different cash flows.

 

 

 

 

 

 

 

 

 

 

Should A, B, both A and B, or neither be accepted if the projects are independent.  Circle your choice

 

Should A, B, both A and B, or neither be accepted if the projects are mutually exclusive.  Circle your choice

 

Project X and Project Y have a cost of $50,000,000 today.  Project X will have cash flows of $20,000,000 per year for three years, while Project Y will have cash flowsof $18,000,000 the first year, $19,000,000 the second year, and $23,000,000 the third year. 

 

Calculate the NPV and the IRR for Project X using a 10% cost of capital and show your work by using TWO of the following methods:  (1) using the formula, (2) identifying all variables using the calculator’s function keys, (3) using the steps on the calculator to calculate NPV and IRR.  Note it is an annuity since the cash flows are the same.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculate the NPV and the IRR for Project Y using a 10% cost of capital and show your work by using TWO of the following methods:  (1) using the formula, (2) identifying all variables using the calculator’s function keys, (3) using the steps on the calculator to calculate NPV and IRR.  Note this project has different cash flows.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Should X, Y, both X and Y, or neither be accepted if the projects are independent.  Circle your choice

 

Should X, Y, both X and Y, or neither be accepted if the projects are mutually exclusive.  Circle your choice

The post An investment opportunity costs $25,000 today, but promises to return $10,000 per year for 3 years, and then $20,000 per year for two more years. appeared first on Infinitessays.org.

Stock performance of a company listed in NYSE, NASDAQ Stock performance of a company listed in NYSE, NASDAQ

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Stock performance of a company listed in NYSE, NASDAQ

 

Stock performance of a company listed in NYSE, NASDAQ

 

 

 

The assignment is to choose a stock that trades on the New York, American, or Nasdaq. Choose a day of the week and find the last or closed price of the stock each week for 14 weeks. Follow what is occurring in the company, the industry, and the market. At the end of 14 weeks, write a 2-page paper based on the price fluctuations and activity. In excel, create a graph plotting a price of the stock over that time frame

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As part of your business plan, you will develop a pro-forma financial model (5 years) for your business. For this week complete the following:

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Quality Fench Financial Forecast

 

Quality Fench Financial Forecast

 

 

Financial Plan (First Draft)

 

As part of your business plan, you will develop a pro-forma financial model (5 years) for your business. For this week complete the following:

 

1. A list of key assumptions that drive your financial model. It is strongly encouraged that you find comparable companies and use industry ratios to justify your assumptions.

 

2. Year 1: Monthly and year-end income statements and cash flows; year-end balance sheet.

 

Note: Use a spreadsheet program such as Excel to construct this information. Be sure to include a separate sheet for your key assumptions

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