Upton Corporation is expected to pay the following dividends over the next four years: $16, $12, $11, and $7.50. Afterwards, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 16 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Please provide as many details as possible on formulas and calculations (Excel preferred). Thank you.

Please provide details as much as possible with formulas and calculations (excel is preferred). Thank you.

Assume a purchase price of $10 Million for both properties.

(a) What is the expected total return (IRR) on a 10-year investment in each property? Use a

financial calculator or equation solver for this.

(b) If the 10% cap rate represents a fair market value for each property, then which property must

be the riskier investment, so that no mispricing has occurred?

(c) What is the approximate annual growth rate in operating cash flows for each building during

first nine years? This is simply the percentage-change in cash flows.

(d) How is the growth rate related to the cap rate and the investor's IRR in each property?

Assuming each property is priced at its required rate of return (i.e. making it NPV=0), what

general economic relationship discussed in class does this show?

Yuri is willing to invest $30,000 for six years, and is an economically rational investor. He has identified three investment alternatives (X, Y, and Z) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the six-year investment period, complete the following table and indicate whether Yuri should invest in each of the investments.

Note: When calculating each investment’s future value, assume that all interest is earned annually. The final value should be rounded to the nearest whole dollar.

1. You lend $900 to a friend who promises to pay you $250 at the end of each of the next 4 years.

a. Draw a timeline from your perspective.

b. If you can reliably earn 4% per year, what is the net present value (NPV) of the loan?

2. You own a perpetual preferred stock issued by Goldman Sachs. If the GS preferred pays a dividend of $.80 per year and today’s market rate for this preferred is 3.0% per year, what is its current market price?

3. If the dividend of the preferred stock described in Q #2 is scheduled to increase 1.0% per year, what is its current market price?

4. You won the New York Get Rich Quick Lottery, and you must decide if you should take a LUMP sum of $25 million now or an ANNUITY of $2,000,000 per year for 20 years. a. If you can reliably earn 3% per year, which option is better? b. If you can reliably earn 6% per year, which option is better?

5. An APR reflects __________ interest only; but an EAR includes _________ interest.

Banks and other lenders are required to disclose a rate called the APR.

a. What is this rate?
b. Why did Congress require that it be disclosed?
c. Is it the same as the effective annual rate?
d. If you were comparing loans could you use their APRs to determine the loan with the lowest effective interest rate?

How are bond prices determined in the market? What is the relationship between interest rates and bond prices? Have you ever purchased a bond? If so, what was your experience with the purchase price and the value of the bond over time? Explain the different type of risk that a bond investor and issuer face. How does a bond's term and collateral changed to affect its interest rate?

At the beginning of first quarter 2015, the bank buys an available-for-sale security for $15. At the end of the first quarter the price is $17. The bank sells the security at $18 during the second quarter 2015.

During the second quarter 2015, as the result of the sale, the bank shareholder's equity ______, the retained profit ________ and the capital reserve ________.

A. increased by $1; increased by $3; decreased by $2

B. increased by $3; increased by $1; increased by $2

C. increased by $1; increased by $3; increased by $2

D. decreased by $1; decreased by $3; increased by $2

You are considering a proposal to produce and market a new sluffing machine. The most likely outcomes for the project are as follows:

Expected sales: 100,000 units per year

Unit price: $190

Variable cost: $114

Fixed cost: $4,080,000

The project will last for 10 years and requires an initial investment of $11.28 million, which will be depreciated straight-line over the project life to a final value of zero. The firm’s tax rate is 30%, and the required rate of return is 12%.

However, you recognize that some of these estimates are subject to error. Sales could fall 30% below expectations for the life of the project and, if that happens, the unit price would probably be only $180. The good news is that fixed costs could be as low as $2,720,000, and variable costs would decline in proportion to sales.

a. What is project NPV if all variables are as expected?

b. What is NPV in the worst-case scenario?

On May 6, 2013, the treasurer of a corporation enters into a long forward contract to buy £1 million in six months at an exchange rate of 1.5532

This obligates the corporation to pay $1,553,200 for £1 million on November 6, 2013

What are the possible outcomes?

Question1

With which of the following statements would most people in business agree? Rationalize your response

1. The short-run profits of a corporation will almost always increase if the firm takes actions the government has determined are in the nation's best interests.
2. Government agencies and firms almost always agree with one another regarding the restrictions that should be placed on hiring and firing employees.
3. Although people's moral characters are probably developed before, they get into a business school, it is still useful for business schools to cover ethics, including giving students an idea about the adverse consequences of unethical behavior to themselves, their firms, and the nation.
4. Developing a formal set of rules defining ethical and unethical behavior is not useful for a large corporation. Such rules generally can't be applied in many specific instances, so it is better to deal with ethical issues on a case-by-case basis.
5. Because of the courage it takes to blow the whistle, “whistle blowers’ are generally promoted more rapidly than other employees.

You wish to purchase a 15-year deferred annuity (payments start now) that will last 20 years and generate $3000 per month for those 20 years while growing in value at 3% during the 20-year payout period. Assuming the discount rate for all cash flows is 7%

What is the price you should pay for this 15-year deferred, 3% growing 20-year annuity? in creating your answer, place a spinner on all key rates (growth and discount)

What is the price (p) and duration (d) of a 6% coupon bond maturing in 20 years and paying interst annually if the current interest rate is 9%?

Select one:

A) p= 311.80, d= 9.18

B) p= 726.14, d= 10.77

C) p= 726.14, d= 11.55

D) p= 1,344.10, d= 12.43