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assignment 1

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Question;1.;The current price of a stock is $36, and the annual risk-free rate is;5%. A call option with a strike price of $31 and 1 year until expiration has a;current value of $6.80. What is the value of a put option written on the stock;with the same exercise price and expiration date as the call option? Round your;answer to the nearest cent.;2.;Pearson Brothers recently;reported an EBITDA of $7.0 million and net income of $2.1 million. It had $2.03;million of interest expense, and its corporate tax rate was 40%. What was its;charge for depreciation and amortization?;$;3.;Needham Pharmaceuticals has a;profit margin of 6% and an equity multiplier of 2.5. Its sales are $100 million;and it has total assets of $54 million. What is its ROE? Round your answer to;two decimal places.;%;4.;Assume that;the average firm in your company's industry is expected to grow at a constant;rate of 7% and that its dividend yield is 6%. Your company is about as risky as;the average firm in the industry, but it has just successfully completed some;R&D work that leads you to expect that its earnings and dividends will grow;at a rate of 50% [D1= D0(1 + g) = D0(1.50)] this year and 20% the following year;after which growth should return to the 7% industry average. If the last;dividend paid (D0) was $2, what is the value per share of your firm's stock?;Round your answer to the nearest cent. Do not round your intermediate;computations.;5.;You have $42,703.17 in a;brokerage account, and you plan to deposit an additional $4,000 at the end of;every future year until your account totals $450,000. You expect to earn 10.7%;annually on the account. How many years will it take to reach your goal? Round;your answer to the nearest whole.;years

 

Paper#48450 | Written in 18-Jul-2015

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