1. Questions 7 to 10
2. Some of theSchoolStreetemployees would be retiring in the near future andSchoolStreetneeds to recruit 2 new employees as the business has grown. Caleb has to figure out the value of theSchoolStreetpension fund and educate the new recruits how to plan their retirement savings.
3. Caleb estimates that the pension fundSchoolStreetsponsored will make a $5 million contribution five years from now. The rate of return on plan assets has been estimated at 8 percent per year. Caleb wants to calculate the value of this contribution 15 years from now, which is the date at which the funds will be distributed to companys retirees. The future value of pension fund Caleb calculated is close to?
4. A.$10,794,620
5. B.$7,346,640
6. C.$15,974,640

1 points

QUESTION 8

1. Celestila Moonn lives in Russia and expects to earn 50,000 Ruble (RUB) this year and would like to spend RUB 45,000 on current consumption (she plans to save the remaining RUB5,000). Unexpectedly, Moonn gets an opportunity to invest RUB10,000 in a project that will repay RUB13,000 in one year.If the current interest rate is 10%, should Moonn take this investment even though she had planned to save only RUB5,000.
2. A.Yes.
3. B.No,because Russian Ruble depreciated 30% last month andMoonnwill realize a loss from this isnvestment.
4. C.No.

1 points

QUESTION 9

1. Moons friend, lives in Greece and planning on moving to Germany, owns a perpetuity that promises to pay 1,000 at the end of each year, forever. Moon received an e-mail from her friend and she offered to sellMoon all of the payments to be received after the 25th year for a price of 1,000.At an interest rate of 10%, shouldMoon pay the 1,000 today to receive payment numbers 26 and onwards?
2. A.Yes.
3. B.No, the perpetuity is worthtoday for 9,077
4. C.No, the perpetuity is worth todayfor 923

1 points

QUESTION 10

1. Caleb prepared the following hypothetical retirement savings example to deliver while he will be meeting with his companys new recruits.
2. Moonnis24 year old and the expected retirement age is 68 and her life expectancy is 93 years. Her current annual expenditure is $30,000.The expected inflation rate of current expenditures until retirement and the expected return on investment are 3% and 8%, respectively.Moonnassumes her consumption expenditures will increase with the rate of inflation, 3%, until she retires. Upon retiring she will have end-of-year expenditures equal to her consumption expenditure at age 68.
3. Caleb calculated the minimum amount thatMoonn must accumulate by age 68 in order to fund her retirement isclosestto:
4. A.$1,552,000
5. B.$928,000
6. C.$1,176,000

1 points

QUESTION 11

1. Questions 11 to 14:
2. CelestilaMoonn, an UMB MBA student was doing her second internship as an equity analyst atSchoolStreet.Moonnwas assignedatask of developing mean return estimates for 20 stocks as preparation for a portfolio optimization.
3. Task -1: UMA Corporation
4. The current dividend of $2.30 is expected to grow at 6 percent indefinitely and the required rate of return on the stock is 13 percent. The current price of the UMA stock is trading at $50. Moon was wondering what constant dividend growth rate that would be required to justify the current market price of $50.
6. Task -2: UML, Inc.
7. UMLjust paid a dividend of $5.00 and the dividend expected to grow 20 percent next three years and then decline to a constant rate of 7 percent indefinitely.Moonnwants to use the Gordon Growth model to value UML, however, she was not sure whether this future dividend stream needs to be discounted back to find the value of UML stock. Moon used the Capital Asset Pricing model to calculate the required rate of return of 17%.
9. Task -3:
10. UMLsigns a new distribution agreement with a UMD andjust announced the new marketing and distributing agreement to sell its products in Canada; several analysts revised their 2016 outlook forUMLReflecting the new agreement, the current consensus 2016 earnings per share is $2.19 and the current consensus 12-month target share price is $59.00.
11. Moonobserves thatUMLsshare price rose from $25.00 to $37.00 after the new agreement was announced. He believes thatUMLsrequired rate of return, cost of equity, is 13.5 percent.
12. Using the information in Task-1,Moonncalculates the value of UMA stock is close to
13. A.$34.05
14. B.$ 34.50
15. C.$33.05

1 points

QUESTION 12

1. Using the information in Task-1, Moonn calculates the growth rate that justify the market price of $50.
2. A.7.09%
3. B.8.03%
4. C.7.35%

1 points

QUESTION 13

1. Using the information in Task- 2, Moonn calculates the value of UML stock that an investor will be willing to pay for today is close to
2. A.$59.23
3. B.$92.45
4. C.$75.00

1 points

QUESTION 14

1. Mooncalculatedthe net present value of growth opportunities (NPVGO) that reflected in SchoolStreets share price after the agreement was announced close to.
2. A.$39.19
3. B.$59.48
4. C.$20.78

1 points