Question

38.

You would like to buy a boat and know you can afford boat payments of $500 a month for 3 years. The interest rate is 3.6%, compounded monthly. How much money can you afford to borrow?

		$16,287
		$15,222
		$17,038
		$19,025

45.

A company is expected to pay their first annual dividend at the end of this year. That payment will be $0.50 a share. The company will increase the dividend by 4% per year in the future. The required return is 12%. What is the estimated value of this stock today?

		$4.98
		$5.65
		$5.98
		$6.25

50. Part 1

A stock has the required rate of return at 15%. The most recent dividend paid D0 = $2.00 and the expected dividend growth rate g = 10%.

What’s the first dividend expected to pay at the end of this year?

		$2.00
		$2.10
		$2.20
		$2.50

Part 2

What’s the estimated value of the stock?

		$44.0
		$40.0
		$42.0
		$38.8

Part 3

If the current stock price on the stock market is $52.28 per share, we should give a _____ recommendation to the stock.

		Buy
		Hold
		Sell

Answer 1

38

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

PV= 500*((1-(1+ 3.6/1200)^(-3*12))/(3.6/1200))

PV = 17038

Please ask remaining parts seperately