WILL THUMBS UP FOR CORRECT ANSWER! :)

1) Pepsi is expected to pay a dividend of $3.8 next year. After that, the dividend is expected to grow at 4% indefinitely. If the appropriate required return for this stock is 10%, how much should the stock price be? Note that the stock price is the present value of future cash flows.

The stock price = $_________

2) Jared just earned his MBA and received a job offer. The offer is as follows:

• His annual salary will be $116,000. For simplicity, assume he gets paid once a year at the end of each year.
• The salary is expected to increase 5% per year.

If Tim expects to work at the company for 28 years and the appropriate discount rate is 7%, what is the present value of this offer?

The value of the offer = $_________

3) You plan for your retirement. You currently have $6,000 in your 401k. If you plan to save $600 per month for the next 36 years, how much will you have in your 401k at the end when you retire? Assume your 401k portfolio earns 9% return with monthly compounding.

The amount at retirement = $__________

4) How much do you need to have at retirement if you plan for the following?

• Withdraw $90,000 per year at the beginning of each year (once a year starting from retirement).
• Leave $400,000 for your heirs at the end.
• Your life expectancy is 34 years after you retire.
• The investment rate after retirement is 5% with annual compounding.

The amount at retirement = $___________