Question
27 - What is the value of a common stock if: a. the firm's earnings and dividends are growing annually at 4 percent, the current
27- What is the value of a common stock if:
a. the firm's earnings and dividends are growing annually at 4 percent, the current dividend is $1.32, and investors require a 8 percent return on investments in common stock?
b. What is the value of this stock if you add risk to the analysis and the firm's beta coefficient is 0.8, the risk-free rate is 1.5 percent, and the return on the market is 8.5 percent?
c. If the price of the stock is $35, what is the rate of return offered by the stock? Should the investor acquire this stock?
28-The dollar cost of the Euro is $1.19.
a. You are planning a trip to Europe and read that hotel charges 125 euros per night. What is the cost to you in dollars?
b. Your dollar will buy how many dollars?
c. After completing your trip, you have 100 euros that you want to convert back to dollars. How many dollars will you receive?
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