TEXTBOOK ASSIGNMENT INSTRUCTIONS

OVERVIEW

The student will complete four Textbook Assignments during this course. Each of these

assignments will consist of one or more comprehensive problems. These assignments will help to

reinforce the concepts from the textbook readings and the homework assignments.

INSTRUCTIONS

The Textbook: Margin Calls & Short Selling Assignment, Textbook: Interest Rates &

Fixed$-$Income Securities and the Textbook: Pro Forma Financial Statements Assignment

will be completed in Connect. The Textbook: Stock Valuation Assignment will be completed

using MS Excel and will be submitted in Canvas. Each textbook assignment is to be completed

independently by each student.

For the Textbook: Stock Valuation Assignment, please follow these instructions:

The board of directors of API, a relatively new electronics manufacturer, has decided to continue

paying a common stock dividend to increase the attractiveness of the stock in the free market.

The board plans to pay $$3\mathrm{.}00$ per share in the coming year $($i$.$e$.,$ next year$)$ and anticipates that its

future dividends will increase at an annul rate consistent with that experienced over the period

from $20$X$0-20$X$3($see below$).$ The company currently has a beta of $1\mathrm{.}1,$ the rate of return for

the market is expected to be $10\%$ and the risk$-$free rate is currently $4\%.$ Given this scenario, what

is the current value of API's common stock? If the current market price is $$40\mathrm{.}00$ per share,

should you purchase this stock? Briefly, explain your answer. $($HINT: This problem requires a

three$-$part calculation to solve it$).$ Your submission must be in MS Excel with a professional

appearance in which all original problem data is displayed and labeled on the surface of

Excel, with all calculations linked to the original problem data and embedded in the cells

$($do NOT round your interim calculations$).$ This assignment must be completed

independently by each student. Post your spreadsheet using this link.