Stock Valuation
A company just paid a dividend of $2.00 per share. The dividend is expected to increase by 5% per year indefinitely. If investors require a 10% rate of return, what is the fair price of this stock today?
$42.00
Find the PV of a $500 annual payment for 5 years at 8%.
$1,996.36
You borrow $100,000, repay $955.65/month for 15 years. What is the EAR?
$1,191.02
Find the EAR for 8% APR, compounded quarterly.
8.24%
You invest $5,000 for 10 years and it grows to $10,000. If interest is compounded quarterly, what nominal annual rate did you earn?
$2,621.12
A company currently pays a $3.00 annual dividend, which is expected to grow by 2% per year indefinitely. If the stock currently sells for $25.25, what rate of return should investors expect to earn?
14.12%
Find the FV of a $200 annual payment for 10 years at 6%.
$2,636.16
How much would you need to invest today to have $5,000 in 8 years if you earn 7% annually?
$2,904.64
Find the EAR for 10% APR, monthly compounding.
10.47%
Find PV of $2,000 per year for 10 years starting in year 5, at 8%.
$9,864.22
Shares of a company sell for $21.00 per share and are expected to pay a dividend of $1.75 next year. Dividends are expected to grow by 3% per year indefinitely. What return should investors require on this stock?
11.33%
If you deposit $150 monthly for 5 years at 9% APR, what’s the future value?
$11,313.62
You invest $2,000 today, and it grows to $3,000 in 5 years. What annual rate of return did you earn?
8.45%
Your credit card has 21% APR. What’s the periodic rate?
1.75%
Find PV of an annuity paying $3,000 for 20 years, starting in year 10, at 7%.
$17,287.33
A company’s next dividend is expected to be $2.00 per share, and dividends are expected to increase by 4% per year indefinitely. If investors require a 9% return, what should the stock sell for today?
$40.00
What is the PV of this annuity due if the respective PV of the Ordinary Annuity is $2,000 with a rate of 7%?
$2,140.00
You want $10,000 in 6 years. If you can invest at 9%, how much do you need to deposit each year?
$1,329.20
A payday loan charges 25% every two weeks. What is the EAR?
32,987%
Find the present value of an annuity with the following payments: $1,000, $2,000, $3,000, $4,000, $5,000, r=4%.
$13,006.49
A company just paid a dividend of $1.60 per share. The dividend is expected to grow by 3% per year indefinitely. If the stock currently sells for $12.10, what rate of return are investors earning?
16.62%
You need to accumulate $100,000 in 15 years by depositing at the beginning of each month into an account earning 5% APR. What monthly payment is needed?
$372.57
You invest $5,000 for 10 years and it grows to $10,000. If interest is compounded quarterly, what nominal annual rate did you earn?
7.18% Nominal
You borrow $100,000, repay $955.65/month for 15 years. What is the EAR?
8.30%
An annuity pays $2,500 for 15 years beginning 5 years from now. r = 6%.
$19,232,53