35.In your analysis of DBM Corporation you find that the current earnings per share are $5.00 per share and most analysts are projecting the earnings per share to grow at a 12 percent rate annually. What can you expect the earnings per share of this firm to be in 7 years? 36. Your grandmother is thrilled that you are going to college and plans to reward you at graduation with a Porsche Turbo automobile. She would like to set aside an equal amount at the completion of each of your college years from her meager pension. If 16
her account earns 12 percent and a new Porsche will cost $50,000, how much will she deposit each year? Assume her first deposit is in exactly one year. $10,462.44 37.Sellzar Corporation currently has sales of $100 million and its marketing department is projecting sales to be $800 million in 4 years. What rate of growth in sales are the marketing people projecting? 38.Suppose that a local savings and loan association advertises a 6 percent annual rate of interest on regular accounts, compounded monthly. What is the effective annual percentage rate of interest paid by the savings and loan? 39. Greg Perry, UTEP's renowned computer jock, is graduating in one year and plans to start his own computer firm, namely Perry's Periphals, Inc. Being a science fiction buff, Greg is planning to start his firm using $50,000 he earned as a trombone player in the Bits and Discs Jazz Band during college and retire in 20 years in order to take the first Intergalactic Space Shuttle trip at an estimated cost of $10.5 million. When Greg returns to earth 10 years thereafter, he plans to live off an annuity of $300,000 per year, starting on the day of his return. This annuity was funded when he left on his space journey and is earning interest at 12 percent per year. But one of the side effects of the space shuttle program has been that every traveler dies exactly 20 years from the day of return. Calculate the growth rate of Perry's Periphals that will make Greg's long-range plans possible. 31.1 percent 40. Jason and Bryan McNutt are presently 3 and 5 years old. Their parents are planning to send them to college at age 18 at a cost of $10,000 per year for each. How much must the parents contribute annually to a college fund to ensure the boys' college education if the interest rate is 12 percent compounded annually? The payments start in one year and end when the younger brother starts college. $2,057
You've reached the end of your free preview.
Want to read all 46 pages?