1) Compute the present price per share (P0) for Olson Corporation, provided the listed information. The data pertain to year just ended.
Sales price per unit=$10
Variable cost per unit=$5
Long-term debt outstanding=$15,000
kd on all long-term debt=5%
Common stock shares outstanding=10,000shares
Dividend payout ratio=40%
Growth rate in earnings and dividends=7%
2) The investor is committed to buying 100 shares of world port management stock in 6 months. She is worried that stock price will rise appreciably over the next six months. Stock is at $45 and she purchases a six month call with a strike of $50. At expiration the stock is at $54. Determine the gain or loss on whole stock option portfolio?