Winter 2011 - Week 7 - Handout (MTU)

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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
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.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

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 + - + =-+ -+ +...
View Full Document

Ask a homework question - tutors are online