1) The apartment building can be well signified as producing net rent of $7.50/SF annually in sum unpaid, with usual growth over long run of 1% per year. Determine the value of apartment building (per sf) if needed rate of return is 12%
2) The investor needs return of 12 percent on risky securities. A stock sells for $25, it pays dividend of $1, and dividends compounded annually at 7 percent. Will this investor discover the stock favourable? Determine the maximum amount which this investor must pay for stock?
3) Annual risk free rate of return is 2 percent and investor thinks that market will increase annually at 7 percent. If stock has beta coefficient of 1.5 and its present dividend is $1, what must be the value of stock if its earnings and dividends are rising annually at 4 percent?