Project #64821 - finance

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

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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