Microsoft Word - 10002-Assignment 1 (Sem 1, 2017).docx

1. 1MarketanalystsexpecttheearningspershareofJJCLtdtobe$3.00nextyear.Thecompanyhastypicallyretained60%ofitsearningsandthispolicyisexpectedtocontinueintheforeseeablefuture.ThereturnrequiredbyinvestorsoncompaniesinJJCsriskclassis10%p.a.Ifthecompanysearningsanddividendsareexpectedtogrowataconstantrateof4%p.a.,thecurrentsharepriceisclosestto:
2. 2You have just settled a lawsuit in your favor and you will be receiving semi-annual payments of $25,000 over the next ten years. The first payment will occur six months from today. You plan on investing these payments and you expect to earn a return of 6% p.a. with the returns compounded monthly. The present value of this investment is