2. What is the present value of $15,500 to be received 12 years from today? Assu

Question

2. What is the present value of $15,500 to be received 12 years from today? Assume a discount rate of 7.5% compounded annually and round to the nearest $1. (Points : 1)
$5,790
$6,508
$7,210
$9,010


3. You decide you want your child to be a millionaire. You have a son today and you deposit $15,000 in an investment account that earns 9% per year. The money in the account will be distributed to your son whenever the total reaches $1,000,000. How old will your son be when he gets the money (rounded to the nearest year)? (Points : 1)
82 years
74 years
60 years
49 years


4. Butler Corp paid a dividend today of $5 per share. The dividend is expected to grow at a constant rate of 6.5% per year. If Butler Corp stock is selling for $50.00 per share, the stockholders' expected rate of return is (Points : 1)
11.50%.
13.56%.
15.49%.
16.50%.


5. Lily Co. paid a dividend of $5.25 on its common stock yesterday. The company's dividends are expected to grow at a constant rate of 8.5% indefinitely. If the required rate of return on this stock is 15.5%, compute the current value per share of Lily Co. stock. (Points : 1)
$81.38
$76.43
$56.23
$43.90


6. At what rate must $500 be compounded annually for it to grow to $1,079.46 in 10 years? (Points : 1)
6 percent
5 percent
7 percent
8 percent


7. How much money must you pay into an account at the end of each of 20 years in order to have $100,000 at the end of the 20th year? Assume that the account pays 6% per year, and round to the nearest $1. (Points : 1)
$1,840
$2,028
$2,195
$2,718


8. A corporate bond has a coupon rate of 12%, a yield to maturity of 10.55%, a face value of $1,000, and a market price of $850. Therefore, the annual interest payment is (Points : 1)
$101.75
$102
$105.50.
$120.0


9. If two firms have the same current dividend and the same expected growth rate, their stocks must sell at the same current price or else the market will not be in equilibrium. (Points : 1)
False, because the required return could be different
True, because we are using a dividend valuation model
True if markets are semi-strong form efficient
True if investors are risk-averse


10. Emery Company just paid a dividend yesterday of $2.25 per share. The company's stock is currently selling for $60 per share, and the required rate of return on Emery Company stock is 16%. What is the growth rate expected for Emery Company dividends assuming constant growth? (Points : 1)
9.47%
9.89%
10.87%
11.81%

Explanation / Answer

Answer for question 9 is False

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