Please Answer All!

1. You have gathered the following information:

Cost of equity	10%
Current book value of equity per share	10
Expected earnings per share in one year	1.14
Residual income growth rate after one year, continuing afterwards in perpetuity	8%

Using the information in the table, estimate this companys share price.

A. Between 0 and 9

B. Between 9 and 18

C. Between 18 and 27

D. Between 27 and 36

E. More than 36

2. You have collected the following information:

Current dividend per share	10
Cost of equity	9%
Dividend growth rate in perpetuity	5%

Calculate this companys expected share price using the information given in the table.

A. Between $50 and $100

B. Between $100 and $150

C. Between $150 and $200

D. Between $200 and $250

E. More than $250

3. You have gathered the following information for a company:

Market value of firm	500
Market value of debt	200
Number of shares outstanding	25

Based on this information, what is this companys share price?

A. Between $0 and $10

B. Between $10 and $20

C. Between $20 and $30

D. More than $30

4. You have gathered the following information:

Cost of equity	10%
Expected share price in two years	84.70

Year	1	2
Dividends per share	4.40	7.26

Using the dividend discount model, calculate this companys expected share price.

A. Less than $55

B. Between $55 and $65

C. Between $65 and $75

D. More than $75

5. You have gathered the following information for a company

Income Statement
	Year Ended June 30,
	2022
Net income	12
Dividends	9
Number of shares outstanding	6
Balance Sheet
	As of June 30,
	2021
Total assets	100
Total shareholders' equity	50

You expect this company to maintain constant return on equity, payout ratio, and mixture of debt and equity in perpetuity. Based on this information, what net income would you expect this company to have during the 2023 fiscal year ending on June 30, 2023?

A. Between $0 and $2

B. Between $2 and $4

C. Between $4 and $8

D. Between $8 and $12

E. More than $12