1. You are buying a $575,000 property, financing it with an 80% loan at 4.25% for 30-years. You believe the property will appreciate at 3.6% per annum. Calculate for each of the next four years: loan payment, loan balance, property price, equity and return on equity.
2. A firm has a stock price per share of $50.00. Next year's EPS is expected to be $5.90. It pays a dividend of $2.00, has an equity multiplier of 2.75, an ROE of 15.00%, and a tax burden of 75.00%. What is the firm's PEG ratio? (Hint: Use “simple growth” as your estimate for ‘g’.)