1. Clinton Industries had $120,000 in taxable income in 2007. What is the company's total tax liability for the year?
2. A government bond can be converted to $25,000 at maturity 10 years from now. What is the value of this bond if the discount rate in the bond market is 9%?
3. Using the Capital Assets Pricing Model(CAPM) and the following data, determine the value of a share of Public Utility Company:
The latest annual dividend paid by Public Utility Co. is $1.50
Growth is constant at an annual rate of 4%
The beta of Public Utility Co. is 1.20
The rate of return on a market portfolio is 14%
The rate of return on U.S. treasury bill is 9%