1. Stock evaluation will tip big if done soon

On Oct 1, 2015 the Wall Street Journal reported the following stock quote:

Stock	Div	Yld%	PE	Vol	Hi	Lo	Close	Chg
FstAmBk	2.99	9.4	7	4	21	20	20 1/4	+1

If First American Bank Corp has dividends that are expected to grow at 5% forever, and the required rate of return is 13%, what is the intrinsic value of its common stock?

2.The XYZ Corporation just paid a cash dividend of $1.80. It is estimated that this firm's dividends will be $2.00 in one year, $3.00 in two years and will grow at a constant rate of 11% thereafter. You are considering purchasing XYZ's common stock, and, because income is important to you you would like to know the SUM of the dividends you will receive. What is the SUM of the first 3 dividends you receive from XYZ?

3.Miller Brothers Hardware paid an annual dividend of $1.25 per share last month. Today, the company announced that future dividends will be increasing by 3 percent annually. If you require a 10 percent rate of return, how much are you willing to pay to purchase one share of this stock today?

4.The preferred stock of Textile Mills pays an annual dividend of $1.65 a share. How much are you willing to pay for one share of this stock if you want to earn a 14 percent annual return?

5.The common stock of Auto Deliveries sells for $25 a share. The stock is expected to pay $1.35 per share next year when the annual dividend is distributed. The firm has established a pattern of increasing its dividends by 3 percent annually and expects to continue doing so. What is the market rate of return on this stock? Enter your answer as x.xx%, without the % symbol

6.You want to purchase some shares of Green World stock but need a 18 percent rate of return to compensate for the perceived risk of such ownership. What is the maximum you are willing to spend per share to buy this stock if the company pays a constant $0.90 annual dividend per share?

7.Yesteryear Productions pays no dividend at the present time. The company plans to start paying an annual dividend in the amount of $2 a share next year, $4 a share the following year and then the company plans on increasing the dividend 10% annually. How much are you willing to pay to buy a share of this stock today if your required return is 17 percent?

8.The preferred stock of Rail Lines, Inc., pays an annual dividend of $12.25 and sells for $59.70 a share. What is the rate of return on this security?Enter your answer as x.xx%, without the % symbol

and then the bond evaluation

The following bond quote is found in the Wall Street Journal: Bonds Cur Yld Vol Close Net Chg GMA 723 9 2 91 1/2

How may dollars must you spend to purchase one of the GMA bonds?

2.Assume that you wish to purchase a 20-year bond that has a parvalue of $1,000 and makes semiannual interest payments of $20. If you require a 10 percent yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

3.Grand Adventure Properties offers a 9.5 percent coupon bond with annual payments. The yield to maturity is 12.6 percent and the maturity date is 11 years from today. What is the market price of this bond if the face value is $1,000?

4.

Great Wall has bonds that will mature in 13 years. These bonds are priced at $743.06 and earn investors a YTM of 12% per year. Interest is paid annually. What is the annual coupon payment investors receive on their investment?

5.The outstanding bonds of The River Front Ferry carry a 6.5 percent coupon and mature in 14 years. The bonds have a face value of $1,000 and are currently quoted at 102.9 of par. What is the yield to maturity on these bonds?

6.Silas Corp wants to issue zero coupon bonds. They estimate investors will require a 5.5% rate of return on their investment. If the bonds will mature in 20 years how much will Silas get for each bond sold. Assume a 1000 par value.

7.Bonner Metals wants to issue new 18-year bonds for some much-needed expansion projects. The company currently has 11 percent bonds on the market that sell for $1,459.51, make annual payments, and mature in 18 years. What should the coupon rate be on the new bonds if the firm wants to sell them at par?