Questions Uploads

pound

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Question

In April 2013 a pound of apples cost $1.53, while oranges cost $1.17. Four

years earlier the price of apples was only $1.32 a pound and that of oranges was $1.03 a pound

a.What was the annual compound rate of growth in the price of apples? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b.What was the annual compound rate of growth in the price of oranges? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

  Compound annual growth rate % per year   

c.If the same rates of growth persist in the future, what will be the price of apples in 2030? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

d.If the same rates of growth persist in the future, what will be the price of oranges in 2030? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 
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dividends and capital

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Question

The expected pretax return on three stocks is divided between dividends and capital gains in the following

way:

StockExpected DividendExpected Capital Gain
A$  0                 $ 2                
B  12                    12                
C 28                    0                
a.If each stock is priced at $100, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 35% (The effective tax rate on dividends received by corporations is 10.5%), and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Stock  Pension  Investor Corporation  Individual
A %   %   %  
B %   %   %  
C %   %   %  
b.Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Stock     Price
A$   
B$   
C$   
 
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The common stock and debt of Chen Inc

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Question

The common stock and debt of Chen Inc are valued at $75 million and $25

million, respectively. Investors currently require a return of 16.1% on the common stock and a return of 7.6% on the debt. If Northern Sludge issues an additional $12 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? Assume that the change in capital structure does not affect the interest rate on Northern’s debt and that there are no taxes. (Do not round intermediate calculations. Enter your answer as a whole percent.)

 
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product development

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Question

How can a failing company obtain funds in order to see a positive return on product development and how can the

firm keep stakeholders happy?

 
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