1) You put= $10,000 in the growth and income stock and $50,000 in the money market fund. Over the next twenty years, you expect your stock and money market funds to average respective return of 14% and 4%. Compute the expected future values of these 2 funds for the next twenty years. Which one will be greater? by how much?
2) Suppose that investors expect Keenan to pay total dividends of= $9,000,000 in 2012 and to have dividend grow at= 7% after 2012. Stock's total market value is= $200 million. Determine the company's cost of equity?
3) A company's common stock dividends have grown over past five-year period from $0.60 per share to $0.89 (today). Suppose that dividends are expected to grow at this rate for forcast future. Company’s stock is presently selling for= $12 per share. New common stock can be sold to net company= $11 per share. Find out costs of internal and external equity for this firm.