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Integrated Potato Chips paid a $1.50 per share dividend yesterday. You expect the dividend to grow steadily at a

rate of 6% per year.

a.What is the expected dividend in each of the next 3 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
 Expected Dividend
  Year 1$      
  Year 2     
  Year 3     
b.If the discount rate for the stock is 10%, at what price will the stock sell today? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
  Current price$   
c.What is the expected stock price 3 years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
  Future price$   
d.If you buy the stock and plan to hold it for 3 years, what payments will you receive? What is the present value of those payments? (Leave no cells blank – be certain to enter “0” wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.)
d.If you buy the stock and plan to hold it for 3 years, what payments will you receive? What is the present value of those payments? (Leave no cells blank – be certain to enter “0” wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.)
     Year 1     Year 2     Year 3 
  Dividend$     $     $     
  Sale of stock            
    
  Total cash flow$     $     $     
    
  PV of cash flow
 
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Airway Express has an evening flight from LA to NY with an average of 80 passengers and a return flight the next

afternoon with an average of 50 passengers. The plane makes no other trip. The charge for the plane remaining in NY overnight is $1,200 and would be zero in LA. The airline is contemplating eliminating the night flight out of LA and replacing it with a morning flight. The estimated number of passengers is 70 in the morning and 50 in the return afternoon flight. The one-way ticket for any flight is $200. The operating cost of the plane for each flight is $11,000. The fixed cost for the plane is $3,000 per day whether it flies or not. 

a) Should the airline replace its night from LA with a morning flight? 

b) Should the airline remain in business?

 
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Question

Airway Express has an evening flight from LA to NY with an average of 80 passengers and a return flight the next

afternoon with an average of 50 passengers. The plane makes no other trip. The charge for the plane remaining in NY overnight is $1,200 and would be zero in LA. The airline is contemplating eliminating the night flight out of LA and replacing it with a morning flight. The estimated number of passengers is 70 in the morning and 50 in the return afternoon flight. The one-way ticket for any flight is $200. The operating cost of the plane for each flight is $11,000. The fixed cost for the plane is $3,000 per day whether it flies or not. 

a) Should the airline replace its night from LA with a morning flight? 

b) Should the airline remain in business?

 
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Your company plans to borrow $13 million for 12 months, and your banker gives you a stated rate of 19 percent

interest.

Calculate the effective rate of interest for the following types of loans.
a.Simple 19 percent interest with a compensating balance of 14 percent. (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.)
  Effective rate of interest %  
b.Discounted interest (with no compensating balance). (Input your answer as percent rounded to 2 decimal places.)
  Effective rate of interest %  
c.An installment loan (12 payments). (Input your answer as a percent rounded to 2 decimal places.)
  Effective rate of interest %  
d.Discounted interest with a compensating balance of 7 percent. (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.)
  Effective rate of interest %  
 
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