Questions from General Finance

Q: Septian, Inc.’s return on equity is 16 percent,

Septian, Inc.’s return on equity is 16 percent, and the management plans to retain 60 percent of earnings for investment purposes. What will be the firm’s growth rate?

Q: Abercrombie & Fitch’s common stock pays a dividend of $0.

Abercrombie & Fitch’s common stock pays a dividend of $0.70. It is currently selling for $34.14. If the firm’s investors require a 10 percent return on their investment from buying Abercrombie & Fitch...

Q: Schlumberger is selling for $64.91 per share and paid

Schlumberger is selling for $64.91 per share and paid a dividend of $1.10 last year. The dividend is expected to grow at 4 percent indefinitely. What is the stock’s expected rate of return?

Q: You’ve just received an offer from a bank for a credit card

You’ve just received an offer from a bank for a credit card with a quoted rate, or APR, of 18 percent compounded monthly. What’s the EAR, or effective annual rate, on the credit card?

Q: You’re in need of some money fast, and rather than ask

You’re in need of some money fast, and rather than ask your folks for help, you’ve decided to look into a payday loan. At a payday loan shop right near your school you see that you can borrow $100 and...

Q: The preferred stock of the Gand t Corporation pays a $2

The preferred stock of the Gand t Corporation pays a $2.75 dividend. What is the value of the stock if your required return is 9 percent?

Q: Zust preferred stock is selling for $42.16 per share

Zust preferred stock is selling for $42.16 per share and pays $1.95 in dividends. What is your expected rate of return if you purchase the security at the market price?

Q: What is the present value of the following? a.

What is the present value of the following? a. A $300 perpetuity discounted back to the present at 8 percent b. A $1,000 perpetuity discounted back to the present at 12 percent c. A $100 perpetuity di...

Q: You own 150 shares of Budd Corporation’s preferred stock at a market

You own 150 shares of Budd Corporation’s preferred stock at a market price of $22 per share. Budd pays dividends of $1.55. What is your expected rate of return? If you have a required rate of return o...

Q: Define the expected rate of return to bondholders.

Define the expected rate of return to bondholders.