This is an extra credit assignment that applies to the topics covered on exam#2 (chapters 8- 10). You can earn up to 3-points for your exam#2 score (3-points equates to 10% on exam#2, and 2% on overall course grade). Answer the following two questions fully: 1. Go to WSJ.com (or any other website you use for finance data (i.e. Bloomberg, yahoo finance, etc.) and find a dividend paying stock that you are interested in. Use one of the stock pricing formulas we used in chapter 9 to calculate how much the stock is worth. (i.e. constant growth dividend model, zero growth model, etc.). You can make assumptions about your required rate of return and about the growth of the dividend for your calculations. Show you calculations and your assumptions. Compare your answer to the market price of the stock. Would you purchase it? How do your assumptions change your answer? Explain. 2. Make up your own fictional company, tell us what it produces/sells, and assume that you are trying to decide whether to purchase a new expensive piece of equipment to increase production. How should you decide whether you should purchase the new equipment or not? Use one or more of the Capital budgeting concepts (and formulas) from chapter 10 to explain your answer. Explain. Your response should be a maximum of 1-page in length (about one paragraph per question); You will receive all 3 points if: 1) your response is in complete sentences and is written in your own words, and 2) you clearly show which equations you used and explain how you applied them in your answer. This is an extra credit assignment that applies to the topics covered on exam#2 (chapters 8- 10). You can earn up to 3-points for your exam#2 score (3-points equates to 10% on exam#2, and 2% on overall course grade). Answer the following two questions fully: 1. Go to WSJ.com (or any other website you use for finance data (i.e. Bloomberg, yahoo finance, etc.) and find a dividend paying stock that you are interested in. Use one of the stock pricing formulas we used in chapter 9 to calculate how much the stock is worth. (i.e. constant growth dividend model, zero growth model, etc.). You can make assumptions about your required rate of return and about the growth of the dividend for your calculations. Show you calculations and your assumptions. Compare your answer to the market price of the stock. Would you purchase it? How do your assumptions change your answer? Explain. 2. Make up your own fictional company, tell us what it produces/sells, and assume that you are trying to decide whether to purchase a new expensive piece of equipment to increase production. How should you decide whether you should purchase the new equipment or not? Use one or more of the Capital budgeting concepts (and formulas) from chapter 10 to explain your answer. Explain. Your response should be a maximum of 1-page in length (about one paragraph per question); You will receive all 3 points if: 1) your response is in complete sentences and is written in your own words, and 2) you clearly show which equations you used and explain how you applied them in your
