This topic contains a solution. Click here to go to the answer

Author Question: In payment for his help with the construction of Valhalla, Wotan offers Fafner two alternatives. ... (Read 103 times)

ishan

  • Hero Member
  • *****
  • Posts: 546
In payment for his help with the construction of Valhalla, Wotan offers Fafner two alternatives. First, he offers 1,260 per year forever (with the first payment in one year).
 
  Second, he offers his sister-in-law, Freia (the girl with the golden apples). If Fafner thinks that Freia is worth 12,000 and his required rate of return is 10.5, which of the following is correct?
  A) Freia is more valuable.
  B) The perpetuity is more valuable.
  C) The two are equal in value. He is indifferent between them.

Question 2

Ramble-On-Rose Florists Inc common shares are priced at 39.96 today and are expected to pay the next annual dividend of 1.85 in one year's time. Investors have historically required an 11 return for holding Ramble-On stock.
 
  Assume that the dividends grow at a constant rate in perpetuity, and calculate the growth rate implicit in today's stock price. Then, calculate the fair price for the stock after the 1.85 dividend in one year's time. Finally, calculate the capital gain rate. That is, the percentage change in the stock price between today and one year from now.
  A) 4.63, 30.39, 31.50
  B) 4.63, 40.64, 5.38
  C) 6.37, 39.96, 0.00
  D) 6.37, 42.55, 6.37
  E) 6.37, 42.55, 6.48



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

cclemon1

  • Sr. Member
  • ****
  • Posts: 312
Answer to Question 1

C

Answer to Question 2

E




ishan

  • Member
  • Posts: 546
Reply 2 on: Jul 10, 2018
Gracias!


at

  • Member
  • Posts: 359
Reply 3 on: Yesterday
Excellent

 

Did you know?

The first documented use of surgical anesthesia in the United States was in Connecticut in 1844.

Did you know?

Elderly adults are living longer, and causes of death are shifting. At the same time, autopsy rates are at or near their lowest in history.

Did you know?

Individuals are never “cured” of addictions. Instead, they learn how to manage their disease to lead healthy, balanced lives.

Did you know?

One way to reduce acid reflux is to lose two or three pounds. Most people lose weight in the belly area first when they increase exercise, meaning that heartburn can be reduced quickly by this method.

Did you know?

Recent studies have shown that the number of medication errors increases in relation to the number of orders that are verified per pharmacist, per work shift.

For a complete list of videos, visit our video library