1. A stock with no growth has r = 0.10 and has a price of $30. If the company is now considering reinvesting 60% of its EPS into projects that have an ROE of 13%, what would the price of the company be if you assumed this growth was constant into the future? Explain and show your work.

2. The lottery is offering two payout choices for the next 20 years:

Choice 1 pays $4,000 each month starting today (time 0) and running through month 240 (20 years from now);

Choice 2 pays $1,000 each week starting today (time 0) and running through week 52 x 20=1,040 (20 years from now).

If the annual discount rate is 7%, set up an expression to calculate each PV.

3. You are considering purchasing two bonds (each with face value = $1,000):

Bond A: 9% 10 year bond with YTM = 8%

Bond B: 8% 5 year bond with YTM = 8%

If you buy one of Bond A and one of Bond B, and you sell the bonds after one year, what do you earn as a return over the year? Show your work