1. A company paid a dividend of $6 per share. The dividend growth of 5% and the cost of equity is 12%. How much is the price per share?
2. You are planning to start your business. Your aunt will lend you the money if you agree to pay her back within 5 years, and you offer to pay her the rate of interest that he would otherwise get by putting her money in a savings account. Based on your earnings and living expenses, you think you will be able to pay him $6,000 in one year, and then $9,000 each year for the next 4 years. If your aunt would otherwise earn 7% per year on her savings, how much can you borrow from her?
3. If you wish to accumulate $140,000 in 13 years, how much must you deposit today in an account that pays an annual interest rate of 14%?
4. Your company is planning to make an offer of $67 per share. You applied for low interest loans and will receive the followings: a) 4-years loan of $4 million, zero interest b) 28-years loan of $4 million, 4% interest, while the normal borrowing rate is 6%. How much is the interest subsidy worth?