Winter 2011 - Week 7 - Handout (MTU)

# Winter 2011 - Week 7 - Handout (MTU) - 5 My stock has...

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Quiz-Time! 1. If I have initial costs of \$1000, and each donut sold makes me \$1.00, but each donut costs \$0.50 to make, how many  donuts do I need to sell in order to break even? 2. I've invented a great game. If you roll 1-3 on a dice, I give you \$10. If you roll 4-6, you give me \$20. Isn't this a  great game? Why don't you play? (Prove why or why not with math) 3. I have a zero-coupon bond with a face value of \$1000. It matures in 5 years. With a yield to maturity of 5%, what is  it worth right now? 4. My bond has a yield to maturity of 5%, annual payments of \$50, and a \$1500 face value. Find the present value.  Time to maturity is 5 years.
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Unformatted text preview: 5. My stock has recurring yearly dividend payments of \$1.00 a share. At a 5% interest rate, what is the value of the stock? 6. Suppose I have a stock with a differential growth model: Draw the cash flow diagram of the differential growth model stock.\ 7. Estimate the growth rate of corporation X with the following data: Plowback ratio of 0.7, Return on Retained Earnings of 10%. 8. Find the NPVGO of a firm with a value of \$50, Net Income of 5 million, 5 million shares outstanding, discount rate of 5%. T 1 2 1 1 Div (1 ) 1 (1 ) (1 ) T T T R g g C P R g R R + - + =-+ -+ +...
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## This note was uploaded on 03/28/2011 for the course ENGR 110 taught by Professor . during the Winter '10 term at UCLA.

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