1. Ace Frisbee Corporation is expected to pay a dividend in Year 1 of $3.00, a dividend in Year 2 of $4.00, and a dividend in Year 3 of $5.00. After Year 3, dividends are expected to grow at the rate of 2.5% per year. Ace Frisbee Corps Beta is 1.2. The consensus estimate of the coming year's market returns is 4%, and T-bills currently offer a 1.5% return. How much should the shares be worth today?

a.

$187.93

b.

$235.47

c.

$178.31

d.

$145.82

2.

Eagle Products' EBIT is $470,000, depreciation is $50,000, capital expenditures are $250,000, and the planned reduction in net working capital is $30,000. What is the free cash flow to the firm if the tax rate is 30%?

a.

-$19,000

b.

$159,000

c.

$85,000

d.

$300,000

3.

Telstra expects to have $3 earnings per share at the end of the year that just started The firm's ROE is expected to be 10% and its Plowback ratio 0.4. If the firm's market capitalization rate is 6%, what is the present value of its growth opportunities? (rounded to 2 decimal points)

a.

$12.40

b.

$40.00

c.

-$43.60

d.

$10.14