MBA/MSF 655, Financial Management & Strategy 37 A practical and prevalent problem in financi of interests of various parties is known as a. ethics b. marginal conflicts c. limited liability d. the options principle e. agency problems Page 9 of 10 agement regarding potential conflicts 38 You have just taken out Just taken out a 30-year mortgage on your new home 10 our new home for $120,000. This tallments. If the stated (nominal) annual hount of each of the monthly installments? mortgage is to be repaid in 360 equal monthly installments. terest rate is 14.75 percent what is the amount of each of the a. $1,515.00 b. $1,472.38 c. $1,493.37 d. $1,522.85 e. $1,440.92 39 Consider three investors in Stock A: Mr. Single invests for 1 year Ms Double invests for 2 years Mrs. Triple invests for 3 years In other words, the 3 investors are all identical, except for how ne 3 investors are all identical, except for how long they plan to hold the stock. Which of the following statements are true? (Hint: Recall what the basic stock valuation principle is.) a. Mrs. Triple would place the highest value on Stock A today because she is investing for the longest time. b. Ms. Double would place the second highest value on Stock A today because she is investing for the second longest time. C. Mr. Single would place the lowest value on Stock A today because he is investing for the shortest time. d. all of the above are true e. Mr. Single, Ms. Double, and Mrs. Triple would all place the same value on Stock A since how long they plan to hold the investment is not relevant to the calculation of today's value f. none of the above are true (if using bubble sheet, just write "p" in to select f) 40 Santa's shippers Inc. Dividends per share are expected to grow indefinitely by 3 percent a year. Next year's dividend is $4.50 and the required rate of return (i.e. equity holder's opportunity cost of capital) is 8 percent. Assuming this is the best information available regarding the future of this firm, what would be the most economically rational value of the stock today (i.e. today's "price")? a. 56.25 b. 150.00 c. 90.00 d. 92.70 e. 45.00