Q1. The common share of Atlanta, corp., is selling for $42 a share and investors require a 15% return on the stock. If two thirds of the return on this stock are derived from dividends yield and the other one third is derived from capital gain yield. What is the amount of the current dividend D0?

options:

1) 3.65

2) $3.86

3) $4.00

4) $4.15

Q2. Based on the following income statement and balance sheet; compute the expected free cash flow to the firm in 2009.

	2009 Forecast	2008 actual
Sales	760	650
Cost of goods sold	410	320
Gross Profit	350	330
Depreciation	120	90
EBIT	230	240
Interest expenses	50	70
Pre-tax earnings	180	170
Taxes (30%)	54	51
Net Income	126	119

ABC Corp. Balance Sheet

	2009 Forecast	2008 actual		2009 Forecast	2008 actual
Cash	90	110	Accounts payables	70	65
Accounts Receivables	215	190	Short-term debts	439	495
Inventory	650	590
Current assets	955	890	Current liabilities	509	560
Property, plant and equ.	1,300	1,180	Long-term debt	320	250
Accu. Depreciation	(200)	(160)	Common stock	900	900
			Retained earnings	326	200
Total assets	2,055	1,910	Total liabilities and owners equity	2,055	1,910

Question 2 options:

1) $81

2) $92

3) $101

4) $108