#1

A stock paid a $2 dividend last year. An investor projects that next year's dividend will be 10% higher and that the stock will be selling for $40 at the end of the year. The risk-free rate of interest is 8%, the market return is 13%, and the stock's beta is 1.2. Determine the value of stock.

a. $35 b. $37 c. $39 d. $42

#2

A firm sells 1000 units of refrigerators. carrying cost per unit is $200 annually. Each order cost of the firm is $1,000. What is the EOQ (Economic Order Quantity)?

1. 250 b. 200 c. 150 d. 100