Q1. Majestic Homes' stock traditionally provides an 8% rate of return

Solve the following questions & write your answer in the box provided:

Q1. Majestic Homes' stock traditionally provides an 8% rate of return. The company just paid a $2 a year dividend which is expected to increase by 5% per year. How much should you expect to pay per share of Magestic Homes? Q2. Your Aunt has promised to leave you an annuity that will pay $60 next year and grow at an annual rate of 4%. The payments are expected to go on indefinitely and the interest rate is 9%. What is the value of the growing perpetuity? Q3. The Bluebird Company has a $10,000 liability it must pay three years from today. The company is opening a savings account so that the entire amount will be available when this debt needs to be paid. The plan is to make an initial deposit today and then deposit an additional $2,500 a year for the next three years, starting one year from today. The account pays a 3% rate of return. How much does the Bluebird Company need to deposit today? Q4. You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The second offer is the payment of $100,000 today and an additional $100,000 two years from today. If the applicable discount rate is 8.75%, which offer should you accept and why? Q5. You are considering a project with the following cash flows: What is the present value of these cash flows, given a 3% discount rate? Q6. You are considering a job offer. The job offers an annual salary of $52,000, $55,000, and $60,000 a year for the next three years, respectively. The offer also includes a starting bonus of $2,000 payable immediately. What is this offer worth to you today at a discount rate of 6%? Q7. Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $5,000, $9,000, and $15,000 over the next three years, respectively. After that time, Marko feels ABC will be worthless. Marko has determined that a 14% rate of return is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.? Q8. The Robert Phillips Co. currently pays no dividend. The company is anticipating dividends of $0, $0, $0, $0.10, $0.20, and $0.30 over the next 6 years, respectively. After that, the company anticipates increasing the dividend by 4% annually. What is the maximum amount you should pay to purchase a share of stock if your goal is to earn a 10% rate of return? Q9 Thompson's Jet Skis has EBITDA of $380. Depreciation is $45 and interest paid is $35. A net total of $69 was paid on long­term debt. The firm spent $110 on fixed assets and increased net working capital by $38. What is the amount of the cash flow to firm? Assume a tax rate of 30%. Q10. Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $2.00 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a 12% return on your equity investments? Q11 The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20% a year for the next four years and then decreasing the growth rate
to 5% per year. The company just paid its annual dividend in the amount of $1.00 per share. What is the
current value of one share if the required rate of return is 9.25%? Q12 Can't Hold Me Back, Inc. is preparing to pay its first dividends. It is going to pay $1.00, $2.50, and $5.00 a share over the next three years, respectively. After that, the company has stated that the annual dividend will be $1.25 per share indefinitely. What is this stock worth to you per share if you demand a 7% rate of return? Q13 Bill Bailey and Sons pays no dividend at the present time. The company plans to start paying an annual dividend in the amount of $.30 a share for two years commencing two years from today. After that time, the company plans on paying a constant $1 a share dividend indefinitely. Given a required return of 14%, what is the value of this stock? Q14 Your firm has total sales of $1,200, cash operating costs of $755 and depreciation expense of $145. The
tax rate is 34%. Interest expenses for the year amounted $24. What is the operating cash flow? Q15 Awnings Incorporated has beginning net fixed assets of $560 and ending net fixed assets of $720. Assets valued at $190 were sold during the year. Depreciation was $50. What is the amount of capital spending? Q16 Solve the questions below for Nabors, Inc. Find the following for the year 2011?
Change in net working capital =
Net capital spending =
Operating cash flow =
Cash flow of the firm =
Net new borrowing =
Cash flow to stockholders = Q17. Estimate Nike’s Beta using (1) monthly returns, (2) weekly returns & (3) daily returns. Go to Yahoo finance Download the last 5 years of monthly prices for the SP500 (GSPC) and Nike (NIKE). Download the last 5 years of weekly prices for the SP500 (GSPC) and Nike (NIKE). Download the last 5 years of daily prices for the SP500 (GSPC) and Nike (NIKE). Convert prices to returns Use regression to estimate Beta. Compare the calculated betas with the one reported by
finance.yahoo.com.