This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Assume that the stock of Perry Corporation has just paid an annual dividend of 5, and that this ... (Read 90 times)

dmcintosh

  • Hero Member
  • *****
  • Posts: 517
on: Jul 10, 2018
Assume that the stock of Perry Corporation has just paid an annual dividend of 5, and that this dividend is expected to grow for the next 2 years at an annual growth rate of 20, and then grow indefinitely at an annual growth rate of 10.
 
  If the risk-free rate is 5, the expected return on the market is 15, and the firm's beta is 0.80, how much should you be willing to pay for this stock?
  A) 203.28
  B) 217.70
  C) 256.81
  D) 315.09
  E) 360.25

Question 2

A real estate agent wants you to buy a plot of land today for 60,000 and he promises that you can sell it back to him in 7 years for 100,000.
 
  If you can earn 9 on alternative investments, then what is the present value of the sales proceeds? Is this a worthwhile investment?
  A) 54,703.42; it is not a worthwhile investment.
  B) 54,703.42; it is a worthwhile investment.
  C) 61,294.51; it is not a worthwhile investment.
  D) 61,294.51; it is a worthwhile investment.
  E) 60,000; not enough information.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

leahchrapun

  • Sr. Member
  • ****
  • Posts: 332
Reply #1 on: Jul 10, 2018
Answer to Question 1

B

Answer to Question 2

A


dmcintosh

  • Member
  • Posts: 517
Reply 2 on: Jul 10, 2018
Gracias!

alexanderhamilton

  • Member
  • Posts: 334
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

In 1886, William Bates reported on the discovery of a substance produced by the adrenal gland that turned out to be epinephrine (adrenaline). In 1904, this drug was first artificially synthesized by Friedrich Stolz.

Did you know?

Autoimmune diseases occur when the immune system destroys its own healthy tissues. When this occurs, white blood cells cannot distinguish between pathogens and normal cells.

Did you know?

Certain rare plants containing cyanide include apricot pits and a type of potato called cassava. Fortunately, only chronic or massive ingestion of any of these plants can lead to serious poisoning.

Did you know?

It is believed that the Incas used anesthesia. Evidence supports the theory that shamans chewed cocoa leaves and drilled holes into the heads of patients (letting evil spirits escape), spitting into the wounds they made. The mixture of cocaine, saliva, and resin numbed the site enough to allow hours of drilling.

Did you know?

About 3.2 billion people, nearly half the world population, are at risk for malaria. In 2015, there are about 214 million malaria cases and an estimated 438,000 malaria deaths.

Annual net primary productivity on Earth. Annual net primary productivity on Earth.
China’s 8% annual increase in oil consumption China’s 8% annual increase in oil consumption
A photograph of Commodore Matthew Perry in 1855 juxtaposed with a Japanese portrait of him. When Per A photograph of Commodore Matthew Perry in 1855 juxtaposed with a Japanese portrait of him. When Per
Chinese workers on a railway in the far West. “Without them,” Leland Stanford, president of the Cent Chinese workers on a railway in the far West. “Without them,” Leland Stanford, president of the Cent
Determine the nominal annual rate of interest of the following ordinary general annuity. Determine the nominal annual rate of interest of the following ordinary general annuity.
Life Table for an Annual Plant Cohort Life Table for an Annual Plant Cohort
Video: Introduction to Human Immunodeficiency Virus (HIV)

For a complete list of videos, visit our video library