Stock A has an earnings of $5 per share at year 1. The interest rate is 20%, and the return on equity is 25%. If there is a plow-back of 40%, what is the stock price at year zero (P0) ?

Select one:

a. $15.00

b. $25.00

c. $30.00

d. $33.00

e. none of the above

Bond A has a coupon rate of 9%, with a three-year maturity and a face value of $1,000. If the discount rate now or future is 10%, and you want to buy bond A at year 2, what is the price you have to pay at year 2 (P2)?

Select one:

a. $990.91

b. $1,000.00

c. $982.64

d. $975.13

e. none of the above

You have borrowed a loan of $20,000 from Chase to buy a car. You have promised Chase to make one mortgage style payment in each year. If you want to borrow this loan for two years and the interest rate is 2.5% every year, what is the interest payment in year one?

Select one:

a. $100.00

b. $2,500.00

c. $500.00

d. $1,500.00

e. None of the above

Stock A has an earnings of $5 per share at year 1. The interest rate is 20%, and the return on equity is 25%. If there is no plow-back, what is the book value of equity per share at the beginning of year 6 ?

Select one:

a. $20.00

b. $21.00

c. $22.00

d. $23.00

e. none of the above