Question

# \$1.00Capital asset pricing model

Chapter 1, # 0
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Q:

1. An issue of common stock has just paid a dividend of \$3.75. Its growth rate is 8%. What is its price if the market's rate of return is 16%? (Show all work/calculations/formulas)

2. Sharon Smith will receive \$1 million in 50 years. The discount rate is 14. As an alternative, she can receive \$2,000 today. Which should she choose? Provide two solutions for this question ( Base your answer on present value calculations for the \$1 million, and future value calculations for the \$2,000. Use the tables in the back of your text, and show all work/calculations/formulas.)

Tutorial

\$1.00
Capital asset pricing model
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• Posted on Jan. 20, 2012 at 08:41:54AM
A:
Preview: ... ^50) = \$1,428.10   She should choose to receive the \$2,000 as this will result to \$1,4 ...

The full tutorial is about 64 words long .