Question
I have the answers but I don't know how to get to the solutions help mee!!! I need to do it with a calculator... Thanks!!!
I have the answers but I don't know how to get to the solutions help mee!!! I need to do it with a calculator...
Thanks!!!
1. Greene, Inc. stock is selling for $51. It just paid its annual dividend of $5 per share and investors require a 12% return. According to the Dividend Growth Model, what should be the stock price three years from now if the company could immediately double its growth rate?
Answer: $73.12
2. If an investment earns 14.6% APR compounded daily, what is its quarterly periodic rate? (give % to 4
decimals)
Answer: 3.7167%
3. Three years ago you bought a 5% coupon bond with a 7-year remaining maturity for $890. If you sold the bond today, what would be your EAR on this investment? Assume coupons are paid semiannually and market interest rates have not changed since you bought the bond.
Answer: 7.1387% EAR
4. Your client has $250,000 in a retirement account, and plans to make ten more annual deposits of $10,000 beginning 18 months from today. The account will earn 7.25% EAR. How much will be in the account when the last deposit is made?
Answer: $661,135.51
5. Your client borrowed $300,000 with a 30-year 6% APR mortgage loan. If the current loan balance is $227,063, how many monthly payments remain?
Answer: 200
6. What is the PV0 of an annuity of ten $5,000 annual payments if the first payment is 18 months from today, and the required return is 8% EAR?
Answer: $32,283.89
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