Little Town

Motors stock has produced returns of 13.8 percent, 11.7 percent, 2.3 percent, -21.4 percent, and 6.7 percent over the past five years, respectively. What is the variance of these returns?

• A.

  .035682

• B.

  .020574

• C.

  .019515

• D.

  .020029

• E.

  .031947

The current dividend yield on Kennedy Motors common stock is 2.49 percent. The company just paid an annual dividend of $1.56 and announced plans to pay $1.72 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on this stock?

• A.

  10.86 percent

• B.

  12.75 percent

• C.

  13.39 percent

• D.

  15.82 percent

• E.

  9.08 percent

What is the NPV of the following set of cash flows at a discount rate of zero percent? What if the discount rate is 14 percent?

Year	Cash Flow
0	$21,400
1	$11,600
2	$13,500
3	$12,200