Alcoa stock is currently trading on the market at $25 per share. It recently paid its annual dividend of $1, has a

dividend growth rate of 5% and required rate of return of 11%. Value this stock and is it over/undervalued.

a. 17.50 Overvalued

b. 19.52 Overvalued

c. 25.00 Undervalued

d 26.50 Undervalued

An investment offers a perpetual cash flow of $55,000 per year. The return you require is 8%.

What is the value of this investment (perpetuity)

a. 464,250.00

b. 504,250.00

c. 562,500.00

d 687,500.00

A $10,000 bond has twelve years to maturity and a coupon rate of 4.35% (semi-annual). Rates on current bonds of similar risk are 4.84%. Value this bond

a. 9,557.92

b. 9,798.51

c. 9,843.22

d. 9,998.51