1. XYZ Inc. has EBIT = $10 million, Interest expense = $4 million, and has a 40% tax rate. If XYZ has 1,000,000 shares of

common stock outstanding, what is XYZs EPS?

2. If XYZs (#1) market stock price is $21, what is XYZs P/E ratio?

3. ABC is expected to pay a $0.40 per share dividend. The required rate of return is 8%, and the growth rate is 2%. What is

ABC stock worth?

4. XYZ stock price is $16.50. If XYZ growth rate is 3%, and XYZ is expected to pay a $1.20 dividend, what is XYZs required

rate of return?

5. 123 preferred stock pays a $6.25 dividend and has a required rate of return = 8.1%. What is the stock worth?

6. If LMO preferred stock is priced at $120, and the dividend is $4.75, what is the required rate of return?

7. Init, Inc. has beta = 1.15. The risk free rate is 4.0%, and the expected market rate is 9.5%.

a. What is Inits risk premium? B. Inits required rate of return?