QUESTION 10

1. 51	Computer stocks currently provide an expected rate of return of			18.6%
   52	MBI is a large computer company and will pay a year-end dividend of			$5.24
   53	The current ask price is	$57.35	per share.
   54	What is the Market's Expectation of the dividend Growth Rate?

   	a.	Dividend Growth Rate (g) = 6.49%
   	b.	Dividend Growth Rate (g) = 9.46%
   	c.	Dividend Growth Rate (g) = 7.46%
   	d.	Dividend Growth Rate (g) = 8.46%

4 points

QUESTION 11

1. 1	B	C	D
   2	MF Corporation has an ROE of		18.00%
   3	It also carries a plowback or retention rate of		82.00%
   4	The market capitalization rate is		17.75%
   5	The expected EPS is		$1.70
   6
   7	What price will the stock sell for five years from today?

   	a.	Stock Price 5 years from today (P5) = $20.37
   	b.	Stock Price 5 years from today (P5) = $10.37
   	c.	Stock Price 5 years from today (P5) = $30.37
   	d.	Stock Price 5 years from today (P5) = $120.37

4 points

QUESTION 12

1. 16	B	C	D
   17	The market concensus is that the Alpha Company has an ROE of		10.0%
   18	The firm has a beta of	1.36	and plans to maintain its
   19	traditional plowback ratio (b) of 3/4.
   20	The current EPS is	$2.55
   21	The annual dividend was just paid.
   22	The concensus estimate of the coming year's market return (Rm) is		15.45%
   23	The T-Bills currently are	5.60%
   24	What is the PVGO?

   	a.	PVGO = -$8.47
   	b.	PVGO = $8.47
   	c.	PVGO = -$9.47
   	d.	PVGO = -$4.87

4 points

QUESTION 13

1. 37	B	C	D
   38	The ABC Corp. has a dividends growth rate of	4.34%	per year.
   39	The year end dividend is	$6.25
   40	The market capitalization rate is	11.34%
   41	The Expected EPS or EPS1 is	$16.34
   42
   43	What is the preasent value of the growth opportunity according to the DDM?

   	a.	Present Value of the Growth Opportunity = $92.89
   	b.	Present Value of the Growth Opportunity = $69.29
   	c.	Present Value of the Growth Opportunity = $89.29
   	d.	Present Value of the Growth Opportunity = $98.29