1. A particular company curretnly has sales of $250 million; sales are expected to grow by 20% next year, the copamny is expected to have a net profit margin of 8% and a payout ration of 50% and to maintain the common stock outstanding at 15.00 million shares. If the required return for the stock is 12%, the ROE is 16%, What is the stock price of the firm?

A) 21.6 B) 20 C) 15 D) 10

2. Your retirement plan involves saving $25,000 per year at the end of each of the next 20 years to produce savings that will be used to make equal annual retirement income payments to you of $50,000 at the end of each of the next 30 years. If the relevant interest rate is 5% per year, will you be in a deficit position (savings insufficient to fund pension payments) or a surplus position (savings greater than what is needed to fund pension payments) at the end of year 20?

Surplus of $68,322

Deficit of $47,554

Deficit of $107,304

Surplus of $58,026

None of the above