1 . Deer Co. is expected to pay a dividend of $0.80 per share this year. The dividends are expected to grow at 1.5% each year. If the stock currently sells for $25 per share, a. What is the dividend yield? b. What is the capital gain yield? c. What is the required return (r)? 2. Pop Co. just paid a $0.57 annual dividend. The dividends are anticipated to increase by 1% each year, and you require a 13% return. What is the estimated price of this company's share (Compute P 0 )? 3. PAK Inc. just paid a dividend of $2.80 per share on its stock this year. The dividends are expected to grow at a constant rate of 5% each year. If the required return is 10% on the stock, a. What is the estimated stock price of this company today (P0 )? b. What is the estimated stock price of this company in ten years (P10 )? Hint: Pt = Dt+1 /(r-g)

4. Bandana Corp. just paid a dividend of $1.50 per share. The dividends are expected to grow at a rate of 30% per year over the next three years and then level off at a growth rate of 3% per year after that. The required return is 8%. - What is the estimated price of the company stock today (P0 )? (Hint: Use the two-stage growth model) 5. ABC Co. currently has an EPS of $4.10 and its earnings are expected to grow at 2% each year. The benchmark PE for the company is 19. a. What is your estimate of the current stock price (P0 )? b. What is the target stock price in Year 5 (P5 )? 6. Olive Corp. has current assets of $15,000, net fixed assets of $13,500, current liabilities of $5,000, and long- term debt of $20,300. a. What is the value of total assets in the balance sheet? b. What is the value of total liabilities in the balance sheet? c. What is the value shareholder' equity in the balance sheet? d. How much is the net working capital of this company? 7. Answer the following True/False questions: a. Liquid assets tend to earn a high rate of return. => True/False b. Liquid assets are defined as assets that can be sold quickly regardless of the price obtained. => True/False 8. Could a company's net capital spending be negative in a given year? Explain how this might come about. 9. Could a company's cash flow to stockholders be negative in a given year? Explain how this might come about. 10. Sunflower Oil has total sales of $1,300,000 and costs of $900,000. Depreciation is $42,000 and the tax rate is 34 percent. The firm has interest expenses of $10,000. a. Prepare an income statement of this company. b. What is the operating cash flow (OCF)? 11. At the beginning of the year, a firm had current assets of $121,306 and current liabilities of $124,509. At the end of the year, the current assets were $122,418 and the current liabilities were $103,718. What is the change in net working capital? 12. Adelson's Electric had beginning long-term debt of $42,511 and ending long-term debt of $48,919. The interest paid was $4,767. What is the amount of the cash flow to creditors?