1. Compute the expected rate of return for Acer common stock which has a 1.5 beta, the risk-free rate is 4.5% and the market portfolio which is composed of New York stock exchange stocks has an expected rate of return of 10%.
2. Calculate the value of a bond that matures in 10 years and has a USD 1000 part value. The annual coupon interest rate is 9% and the market's required yield to maturity on a comparable risk bond is 15%. What is the value of the bond if it paid interest semi-annually?
3. If Stanford Corporation's net income is USD 200 Mln, its common equity is USD 833 Mln, and management plans to retain 70% of the firm's earnings to finance new investments, what will be the firm's growth rate?
4. Gilliland Motor Inv paid a USD 3.75 dividend last year, If the company's return is 24% and its retention is 25%, what is the value of the common stock if the investors require a 20% rate of return?
5. The common stock of NCP paid USD 1.32 in dividends last year. Dividends are expected to grow at an 8% annual rate for an indefinite number of years. a. If your required rate of return is 10.5%, what is the value of the stock for you? b. Should you make the investment

SHOW COMPUTATION.