9 Finance Questions
1 Boehm Incorporated is forecasted to strong a $3.00 per portion-out dividpurpose at the purpose of this year (i.e., D1 = $3.00). The dividpurpose is forecasted to develop at a steady trounce of 5% a year. The demandd trounce of comply on the fund, rs, is 18%. What is the appraise per portion-out of the association’s fund? Complete your reply to the direct cent.____________
2 A association vulgarly strongs a dividpurpose of $3.25 per portion-out, D0 = 3.25. It is estimated that the association’s dividpurpose conquer develop at a trounce of 16% percent per year ce the instant 2 years, then the dividpurpose conquer develop at a steady trounce of 7% thereafter. The association’s fund has a beta correspondent to 1.65, the waste-free trounce is 7 percent, and the dispense waste douceur is 4 percent. What is your estimate is the fund’s vulgar figure? Complete your reply to the direct cent.____%
3 A fund is trading at $75 per portion-out. The fund is forecasted to enjoy a year-purpose dividpurpose of $2 per portion-out (D1 = 2), and it is forecasted to develop at some steady trounce g throughout duration. The fund’s demandd trounce of comply is 14 percent. If dispenses are fertile, what is your ceecast of g? Complete the reply to the direct hundredth.______%
4 You are because an investment in Crisp’s Cookware’s low fund. The fund is forecasted to strong a dividpurpose of $2.25 a portion-out at the purpose of the year (D1 = $2.25); its beta is 0.95; the waste-free trounce is 2.7 %; and the dispense waste douceur is 6%. The dividpurpose is forecasted to develop at some steady trounce g, the fund vulgarly dispose-ofs ce $40 a portion-out. Assuming the dispense is in makeweight, what does the dispense judge conquer be the fund figure at the purpose of 3 years (i.e., what is P 3 )? Complete your reply to the direct cent. $_________
5 Brushy Mountain Mining Association’s ore reserves are being depleted, so its sales are progress. Also, its gulf is getting deeper each year, so its costs are encouragement. As a upshot, the association’s hues and dividends are lowly at the steady trounce of 5% per year. If D0 = $2 and rs = 9%, what is the appraise of Brushy Mountain Mining’s fund? Complete your reply to the direct cent. $______
6 The beta cofertile ce Fund C is bC = 0.3, and that ce Fund D is bD = – 0.3. (Fund D’s beta is indirect, indicating that its trounce of comply rises whenever complys on most other funds drop. There are very rare indirect-beta funds, although assembly performance and gold mining funds are rarely cited as examples.)
1. If the waste-free trounce is 6%and the forecasted trounce of comply on an medium fund is 14%, what are the demandd trounces of comply on Funds C and D? Complete the replys to span decimal places.
a. rC = _____ % b. rD = ______%
2. Ce Fund C, imagine the vulgar figure, P0, is $25; the instant forecasted dividend, D1, is $1.50; and the fund’s forecasted steady developth trounce is 4%. Is the fund in makeweight? Explain, and explain what would occur if the fund is referable in makeweight. ——–
I. In this footing, the forecasted trounce of comply = 8.40%. However, the demandd trounce of comply is 10%. Investors conquer follow to suborn the fund, amelioration its figure to $34.09. At this figure, the fund conquer be in makeweight.
II. In this footing, the forecasted trounce of comply = 10%. However, the demandd trounce of comply is 8.40%. Investors conquer follow to dispose-of the fund, amelioration its figure to $34.09. At this figure, the fund conquer be in makeweight.
III. In this footing, the forecasted trounce of comply = 8.40%. However, the demandd trounce of comply is 10%. Investors conquer follow to dispose-of the fund, amelioration its figure to $34.09. At this figure, the fund conquer be in makeweight.
IV. In this footing, the forecasted trounce of comply = 10%. However, the demandd trounce of comply is 8.40%. Investors conquer follow to suborn the fund, amelioration its figure to $34.09. At this figure, the fund conquer be in makeweight.
V. In this footing, twain the forecasted trounce of comply and the demandd trounce of comply are correspondent. Therefore, the fund is in makeweight at its vulgar figure.
7 Assume that the medium strong in your association’s toil is forecasted to develop at a steady trounce of 6% and that its dividpurpose comply is 7%. Your association is about as wastey as the medium strong in the toil, not attributable attributablewithstanding it has normal successfully completed some R&D production that leads you to forecast that its hues and dividends conquer develop at a trounce of 50% [D1 = D0(1 + g) = D0(1.50)] this year and 30% the forthhereafter year, behind which developth should comply to the 6% toil medium. If the decisive dividpurpose hired (D0) was $1, what is the appraise per portion-out of your strong’s fund? Complete your reply to the direct cent. Do referable complete your middle computations. $_____
8 Investors demand a 17% trounce of comply on Brooks Sisters’ fund (rs = 17%).a) What would the appraise of Brooks’s fund be if the prior dividpurpose was D0 = $2 and if investors forecast dividends to develop at a steady coalescence annual trounce of (1) – 4%, (2) 0%, (3) 3%, or (4) 12%? Complete your replys to the direct cent.a. $ ____b. $ ______c. $ _____d. $ ___________________________________________________________________________________________________
9 The waste-free trounce of comply, rRF , is 10%; the demandd trounce of comply on the dispense, rM, 14%; and Schuler Association’s fund has a beta cofertile of 1.5.
a) If the dividpurpose forecasted during the hereafter year, D1, is $2.00, and if g is a steady 1.5%, then at what figure should Schuler’s fund dispose-of? Complete your reply to the direct cent. _______
b) Now, imagine the Federal Reserve Board extensions the specie accoutre, causing a drop in the waste-free trounce to 2% and rM to 12%. How would this favor the figure of the fund? Complete your reply to the direct cent.$ _____
c) In analysis to the alter in segregate b, imagine investors’ waste distaste discards; this deed, utterly with the discard in rRF, causes rM to drop to 10%. At what figure would Schuler’s fund dispose-of? Complete your reply to the direct cent.$ _____
d) Imagine Schuler has a alter in skill. The fantastic assemblage institutes policies that extension the forecasted steady developth trounce to 6%. Also, the fantastic skill stabilizes sales and receipts, and thus causes the beta cofertile to discard from 1.5 to 1.0. Assume that rRF and rM are correspondent to the appraises in segregate c. Behind entire these alters, what is Schuler’s fantastic makeweight figure? (Note: D1 goes to $2.09.) Complete your reply to the direct cent. e) $_______
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