Question 7 (1 point) What price today would you expect to pay for a stock with...

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Statementshowing Computations
Paticulars	Amount
Q7 A $27.78
P0 = D1/(ke-g)
Where P0 is the price
Ke is the required return	13.00%
g is the growth rate	4.00%
D1 is dividend at end of year	2.5
P0 = 2.50/(13% - 4%)
P0 = 2.50/(9%)
P0 = 27.78

Q8
b blend of equity and debt used by the firm

Q10 A 19.9% as explained below
Cash outflows	100,000.00
Cash inflows	30,000.00
PVf for 6 Years = 100,000/30000	3.3333
PVF at 19%	3.4098
PVF at 20%	3.3255
Diff at 1 %	0.0843
IRR = 20% + (3.3255-3.3333)/.0843
IRR = 20% + (-.0078)/.0843	19.91%
	PVF 19%	PVF20%
1.00	0.8403	0.8333
2.00	0.7062	0.6944
3.00	0.5934	0.5787
4.00	0.4987	0.4823
5.00	0.4190	0.4019
6.00	0.3521	0.3349
PVF for 6 Years	3.4098	3.3255

Answer 2

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