Question
1) Assume Evco, Inc. has a current stock price of $50.00 and will pay a $2.00 dividend in one year; its equity cost of capital
1)Assume Evco, Inc. has a current stock price of $50.00and will pay a$2.00dividend in one year; its equity cost of capital is 15%.What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price?
We can expect Evco stock to sell for $
2)Suppose the interest rate is6.6 % APR with monthly compounding. What is the present value of an annuity that pays $ 115 every three months four years? (Note: Be careful not to round any intermediate steps less than six decimal places.)
The pv of the annuity is $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started