Homework Answers
rate positively .. let me know if you need any clarification.
| Ans 7 | price today = present value of future cash flow | |||||
| i | ii | iii=i+ii | iv | v=iii*iv | ||
| year | dividend | Sales price | Total | PVIF @ 12% | present value | |
| 1 | 3 | 3 | 0.8929 | 2.68 | ||
| 2 | 4.25 | 4.25 | 0.7972 | 3.39 | ||
| 3 | 6 | 100 | 106 | 0.7118 | 75.45 | |
| 81.52 | ||||||
| Therefore answer = | $ 81.52 | |||||
| Ans 8 | ||||||
| Common stock | 40000 | |||||
| paid in capital in excess of par | 500000 | |||||
| Total | 540000 | |||||
| Number of share = | 40000 | |||||
| Issue price = 540000/40000 | 13.5 | |||||
| Ans = | $ 13.50 |
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