hw03

What percentage of households in the United States own corporate stock, either directly or indirectly?   a.  15 percent   b.  25 percent   c.  50 percent   d.  30 percent   e.  20 percent

Why may different analysts arrive at different intrinsicvalues for the same stock?

After careful analysis, you have determined that a firm’s dividends should grow at 15%, on average, in the foreseeable future. The firm’s last dividend was $1.5. Compute the current price of this stock, assuming the required return is 20%

Distinguish between a stock and a flow of renewable resource.

Which of the following would be classified as private investment?   a. An individual’s purchase of a used car   b. A family’s purchase of groceries   c. A family’s purchase of a new car   d. An individual’s purchase of a General Electric bond   e. A family’s purchase of a newly built home

Question: Common stock value – All growth models. Personal Finance Problem. You are evaluating thepotential purchase of a small business currently generating $40,000 of after-tax cash flow. Thecompany has $25,000 of Preferred Stock and $150,000 of debt.(FCF0 = $40,000). On the basis of a review of similar-risk investment opportunities, you must earn arate of return of Common stock value – All growth models. Personal Finance Problem. You are evaluating thepotential purchase of a small business currently generating $40,000 of after-tax cash flow. Thecompany has $25,000 of Preferred Stock and $150,000 of debt.(FCF0 = $40,000). On the basis of a review of similar-risk investment opportunities, you must earn arate of return of 9% on the proposed purchase. Because you are relatively uncertain about future cashflows, you decide to estimate the firm’s common stock value using three possible assumptions aboutthe growth rate of cash flows. 1. What is the firm's value if cash flows are expected…