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Excel Worksheet

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Submitted By albertito7
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1) Assume that the average firm in your company's industry is expected to grow at a constant rate of 4% and that its dividend yield is 7%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 50% [D1 = D0(1 + g) = D0(1.50)] this year and 30% the following year, after which growth should return to the 4% industry average. If the last dividend paid (D0) was $2.75, what is the value per share of your firm's stock? Round your answer to the nearest cent. Do not round your intermediate computations.

2) The Moore Corporation had operating income (EBIT) of $1,000,000. The company's depreciation expense is $200,000. Moore is 100% equity financed, and it faces a 35% tax rate.

a) What is the company’s net income? b) What is the company’s net cash flow?

3) A Treasury bond that matures in 10 years has a yield of 6%. A 10-year corporate bond has a yield of 10%. Assume that the liquidity premium on the corporate bond is 0.4%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.

4) Find the present value of $700 due in the future under each of the following conditions. Round your answers to the nearest cent.

a) 4% nominal rate, semiannual compounding, discounted back 9 years b) 4% nominal rate, quarterly compounding, discounted back 9 years c) 4% nominal rate, monthly compounding, discounted back 9 years

5) Assume you are given the following relationships for the Clayton Corporation: Sales/total assets | 2.1 | Return on assets (ROA) | 3% | Return on equity (ROE) | 7% | 1. Calculate Clayton's profit margin. Round your answer to two decimal places. %

2. Calculate Clayton's debt ratio. Round your answer to two decimal places. %

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