1. In 2019, a year in which the firm's revenue increased, the firm's gross margin (gross profits/revenue) also increased but the firm's operating margin (operating profit/revenue) decreased.What does this imply regarding the performance of the firm in 2019?

2. Your friend Bob won the lottery.Four months from today he will start receiving his first annual payments and these payments will continue forever.His first payment will be $100,000 and these annual payments will grow at 2%/year.If we assume the appropriate risk adjusted discount rate is 7%/year, what is the current value of your friend's lottery winnings?Providing an accurate equation with all of the appropriate inputs will get full credit.

3.If a bond's market rate increases after the bond is issued then the value of the bond would increase.Agree or disagree?Explain!

4.The firm's forecasted future dividends per share (DPS) over the next five years are:

DPSDPSDPSDPSDPS

Year 1Year 2Year 3Year 4Year 5

$2.00 $2.60$3.40$4.00$4.20

If you believe the growth rate in dividends after year 5 is 3%/year in perpetuity and the firm's beta is 0.8, then provide and equation to value the stock (include the value of all inputs in your equation).

5.Describe in words what the CAPM (Capital Asset Pricing Model) measures?Define the inputs used in the model.

6.Why is the firm's cost of raising debt capital (k_d) always less than the firm's cost of raising equity capital (k_e)?Explain fully!

7.When estimating a firm's WACC, the weight of equity is a necessary input.Provide a detailed specific description of how you would estimate the weight of equity used to estimate the firm's WACC.