Project #64821 - finance

1.) Which of the two earnings streams do you prefer?   [Hint:  Choose any positive time-value of

     money.  Say 10 percent.]   Please tell me why and please show your work.

 

Year               1                      2                            3                           ____4      _    

 

         Stream A:       $850             $750                    $750                 $850

 

         Stream B:       $800             $800                     $800                 $800  

 

 

 

 

 

 

 

 

 

 

 

2. ) Mr. Golden A. Halo, an elderly alumnae of SU, has been thinking about establishing a trust fund for 

     his granddaughter’s SU tuition.  He plans to make equal, annual payments, beginning four years

     from today, into an account that will yield 8 percent per year.  If he makes seven payments, how 

     much will each have to be so that his granddaughter will have $80,000 to begin her SU studies in 

     eleven years?  [Hint:  An end of period or beginning of period problem?  Draw a good time line!!]

 

 

 

 

 

 

 

 

 

3.)  Assume you are willing to pay $176.57 for a share of PDQ common stock.  The company pays an 

     annual dividend (not quarterly, which is normal).  The current dividend is $12.00.  What is your 

     required rate of return (i), if you believe the annual dividend will be $14.76 in the next seven years?

     [Hint: What is the implied growth rate for the corporation and the dividend?  See time/value of 

     money tables.]

Subject Mathematics
Due By (Pacific Time) 04/02/2015 12:00 pm
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