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If D1 = $2, g (which is constant) = 5%, and P0 = $50, the stock’s expected dividend yield is ____________ and capital gains yield is _________________?

A firm with a 10 percent cost of capital is evaluating two projects for this year’s capital budget.  The projects’ expected after-tax cash flows are as follows: Year: 0 1 2 3 Project X: -$13,000 $6,900 $5,600 $6,000 Project Y: -$14,000 $5,500 $6,000 $6,600 If Projects X and Y are mutually exclusive, which one(s) should the firm adopt?

If a firm’s beta is 1.6, the risk-free rate is 4.5%, and the expected return on the market is 10.5%, what will be the firm’s cost of equity using the CAPM approach?

A firm with a 12 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$5,000 $2,400 $2,200 $2,400 $2,200 Calculate the project’s profitability index (PI).

Kiev Corporation’s outstanding bonds have a $1,000 par value, a 13 percent semiannual coupon, 10 years to maturity, and an 11.5 percent yield to maturity (YTM).  What is the bond’s price?

Suppose you inherited $275,000 and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?

Li & Associates’ common stock currently trades at $45 a share.  It is expected to pay an annual dividend of $2.48 a share at the end of the year (D1 = $2.48), and the constant growth rate is 7.8 percent a year.  What is the company’s cost of common equity if all of its equity comes from retained earnings?

Martinez Motors’ bonds have 8 years remaining to maturity.  Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 7 percent; and the yield to maturity is 9.5 percent.  What is the bond’s current market price?

Kiev Corporation’s outstanding bonds have a $1,000 par value, a 7 percent semiannual coupon, 18 years to maturity, and an 11 percent yield to maturity (YTM).  What is the bond’s price?

If you could change one thing in the ENG3C course, what would you change?