GF 520 PGU Unit 3 Corporate Finance and Constant Dividend Growth Questions

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Textbook ProblemsThis assignment will be used to assess CourseOutcome GF520-3: Apply risk measurementtechniques for single assets and portfolios.Complete the following Problems from the textbook:Chapter 9 – Problems 9-12 and 9-23, pages 294-295Chapter 10 – Problems 10-4 and 10-10, pages 323Chapter 11 – Problems 11-4 and 11-5, page 363Chapter 22 – Problems 22-2 and 22-10, pages 709–710You must show your work to receive credit for youranswers. No credit will be given for the correct answeralone. You should perform all calculations in Excel andpaste them into the Word document using the “PasteSpecial-Excel Worksheet Object” feature. This allowsyour instructor to double click on your work to see theformulas and calculations you used to answer theselected problems.Review the Grading Rubric before starting thisAssignment. Submit one Word file, including a titlepage, to the Unit 3: Assignment Dropbox.

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Textbook Problems
This assignment will be used to assess Course
Outcome GF520-3: Apply risk measurement
techniques for single assets and portfolios.
Complete the following Problems from the textbook:
Chapter 9 – Problems 9-12 and 9-23, pages 294-295
Chapter 10 – Problems 10-4 and 10-10, pages 323
Chapter 11 – Problems 11-4 and 11-5, page 363
Chapter 22 – Problems 22-2 and 22-10, pages 709–
710
You must show your work to receive credit for your
answers. No credit will be given for the correct answer
alone. You should perform all calculations in Excel and
paste them into the Word document using the “Paste
Special-Excel Worksheet Object” feature. This allows
your instructor to double click on your work to see the
formulas and calculations you used to answer the
selected problems.
Review the Grading Rubric before starting this
Assignment. Submit one Word file, including a title
page, to the Unit 3: Assignment Dropbox.
https://purdueglobal.brightspace.com/d2l/le/content/125618/viewContent/9778657/View
1/1
Chapter 9
12. Nonconstant Growth Metallica Bearings, Inc., is a young start-up company. No
dividends will be paid on the stock over the next 9 years because the firm needs to plow
back its earnings to fuel growth. The company will pay a dividend of $15.75 per share in
10 years and will increase the dividend by 4.8 percent per year thereafter. If the
required return on this stock is 12 percent, what is the current share price?
23. Finding the Required Return Jupiter Satellite Corporation earned $29 million for
the fiscal year ending yesterday. The firm also paid out 30 percent of its earnings as
dividends yesterday. The firm will continue to pay out 30 percent of its earnings as
annual, end-of-year dividends. The remaining 70 percent of earnings is retained by the
company for use in projects. The company has 2.6 million shares of common stock
outstanding. The current stock price is $105. The historical return on equity (ROE) of 11
percent is expected to continue in the future. What is the required rate of return on the
stock?
Chapter 10
4. Stocks versus Gambling Critically evaluate the following statement: Playing the
stock market is like gambling. Such speculative investing has no social value, other than
the pleasure people get from this form of gambling.
10. Historical Returns The historical asset class returns presented in the chapter are
not adjusted for inflation. What would happen to the estimated risk premium if we did
account for inflation? The returns also are not adjusted for taxes. What would happen to
the returns if we accounted for taxes? What would happen to the volatility?
Chapter 11
4. Portfolio Expected Return You have $10,000 to invest in a stock portfolio. Your
choices are Stock X with an expected return of 12.7 percent and Stock Y with an
expected return of 9.1 percent. If your goal is to create a portfolio with an expected
return of 11.2 percent, how much money will you invest in Stock X? In Stock Y?
5. Calculating Returns and Standard Deviations Based on the following information,
calculate the expected return and standard deviation for the two stocks:
Chapter 22

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growth rate

corporate finance

Present Value

general formula

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