Tre-Bien, Inc., is a fast-growing technology company. The firm projects a rapid growth of 30 percent for the next two years, then a growth rate of 17 percent for the following two years. After that, the firm expects a constant growth rate of 8 percent. The firm expects to pay its first dividend of $2.45 a year from now. If the required rate of return on stocks with similar risk is 22 percent, what is the current price of the stock? Please show formulas to obtain answers on each part.

Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $15.6 million. The equipment will be depreciated straight line over 6 years, but, in fact, it can be sold after 6 years for $584,000. The firm believes that working capital at each date must be maintained at a level of 20% of next year’s forecast sales. The firm estimates production costs equal to $5.50 per trap and believes that the traps can be sold for $12 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm’s tax bracket is 40%, and the required rate of return on the project is 12%

Year: 0 1 2 3 4 5 6 Thereafter Sales (millions of traps)

0.00 0.58 0.83 1.00 1.00 0.52 0.20 0

What is project NPV? (round to 3 decimals)

DEPRECIATION METHODS

Charlene is evaluating a capital budgeting project that should last for 4 years. The project requires $375,000 of equipment. She is unsure what depreciation method to use in her analysis, straight-line or the 3-year MACRS accelerated method. Under straight-line depreciation, the cost of the equipment would be depreciated evenly over its 4-year life (ignore the half-year convention for the straight-line method). The applicable MACRS depreciation rates are 33%, 45%, 15%, and 7%. The company's WACC is 10%, and its tax rate is 40%.

1. What would the depreciation expense be each year under each method? Round your answers to the nearest cent.
   

   Year	Scenario 1 (Straight-Line)	Scenario 2 (MACRS)
   1	$	$
   2
   3
   4

2. Which depreciation method would produce the higher NPV?
   -Select-Straight-LineMACRSItem 9
   
   How much higher would the NPV be under the preferred method? Round your answer to two decimal places. Do not round your intermediate calculations.
   $

Florida Farms (FFC) is considering producing a new fruit juice, Elite. FFC has spent two years developing this product. FFC has also test-marketed Elite, spending a token sum to conduct consumer surveys and tests of the product in 30 states.

Based on the previous fruit juice products and the results in the test marketing, management believes consumers will buy 4 million packages each year for five years at 50 cents per package, Equipment to produce Elite will cost FFC $500,000, and $150,000 of additional net working capital will be required to support Elite sales. FFC expects production costs to average 30% of Elite's net revenues, with fixed overheads & sales expenses totaling $262,000 per year. The equipment has a life of five years after which time it will have no salvage value. Working capital is assumed to be fully recovered at the end of five years. Depreciation is straight-line (no salvage) and FFC 's tax rate is 45%. The required rate of return for a similar risk is 8%.

Should Florida Farms produce this new fruit drink? Apply the NPV method as the basis of your analysis and recommendation.

Riskfree rate 0.03                   

Market rate 0.11

You have three stocks in your portfolio: Applied Materials, Texas Instruments, and Qualcomm. Use their information in the chart below to answer the questions.

1. What is each stock’s dividend yield?

2. What is each stock’s capital gain return?

3. What is each stock’s holding period return

4. Using the holding period returns and the data above, calculate your expected return on your portfolio.

5. What is each stock’s required return?

6. Using the required returns as the means, what is virtually the entire range of returns for each stock?-just need help understanding this question

Suppose you bought a PUT option on a share of Tesla stock (Strike Price $200, Expiration Date 11/1/2019) today for a price of $4.99. On the expiration date, the price of a share of Tesla is $300. Answer the following questions.

1. Will you exercise the put option?
2. What is your Payoff?
3. What is your Profit/Loss?

An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon. Bond L matures in 10 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturity and that 10 more payments are to be made on Bond L. What will the value of the Bond L be if the going interest rate is 5%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 5%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 8%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 8%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 12%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 12%? Round your answer to the nearest cent. $ Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change? Long-term bonds have lower reinvestment rate risk than do short-term bonds. The change in price due to a change in the required rate of return increases as a bond's maturity decreases. Long-term bonds have greater interest rate risk than do short-term bonds. The change in price due to a change in the required rate of return decreases as a bond's maturity increases. Long-term bonds have lower interest rate risk than do short-term bonds

You are trying to decide how much to save for retirement. Assume you plan to save $ 8,000 per year with the first investment made one year from now. You think you can earn 11.0 % per year on your investments and you plan to retire in 44 years, immediately after making your last $ 8,000 investment.

a. How much will you have in your retirement account on the day you retire?

b. If, instead of investing $ 8,000 per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be?

c. If you hope to live for 17 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 17 th withdrawal (assume your savings will continue to earn 11.0% in retirement)?

d. If, instead, you decide to withdraw $ 1,421,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings? (Use trial-and-error, a financial calculator: solve for "N", or Excel: function NPER)

e. Assuming the most you can afford to save is $ 1,600 per year, but you want to retire with $ 1,000,000 in your investment account, how high of a return do you need to earn on your investments? (Use trial-and-error, a financial calculator: solve for the interest rate, or Excel: function RATE)

​(Round to the nearest​ cent.)

Assume Highline Company has just paid an annual dividend of $0.92. Analysts are predicting an 10.2% per year growth rate in earnings over the next five years. After​ then, Highline's earnings are expected to grow at the current industry average of 4.8% per year. If​ Highline's equity cost of capital is 7.5% per year and its dividend payout ratio remains​ constant, for what price does the​ dividend-discount model predict Highline stock should​ sell?

Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $687,000 that would be depreciated on a straight-line basis to zero over the 5-year life of the project. The equipment will have a market value of $187,000 at the end of the project. The project requires $57,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $176,600 a year. What is the net present value of this project if the relevant discount rate is 13 percent and the tax rate is 35 percent?

Mrs. Jay has asked you, the CFO of the company, to write a memo outlining the advantages and disadvantages of using debt relative to equity. She also wants the memo to cover the impact that his decision might have on the firm’s weighted cost of capital and overall firm value.

You expect a share of stock to pay dividends of $1.40, $1.65, and $1.90 in each of the next 3 years. You believe the stock will sell for $19.00 at the end of the third year.

a. What is the stock price if the discount rate for the stock is 20%?

b. What is the dividend yield for year 1?

c. What will be the dividend yield at the start of year 2?

What is the self-supporting growth rate for Typhoonforce in percent? Typhoonforce generated $5,000,000 in sales during 2018, and its year-end total assets were $2,500,000. Also, at year-end 2018, spontaneous liabilities were $700,000. Looking ahead to 2019, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 2%, and its payout ratio will be 66%..

The CFO of Rosecurity, is planning for the company's operations next year, and he wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data (in millions) for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year (in millions)? Last year's sales = $350, Last year's accounts payable = $40, Sales growth rate = 3%, Last year's notes payable = $50, Last year's total assets = $500, Last year's accruals = $30, Last year's profit margin = 3%, Target payout ratio = 57%