Question 1. An analyst is trying to estimate the intrinsic value of the stock of Harkleroad Technologies. The analyst estimates that Harkleroad's free cash flow during the next year will be $25 million. The analyst also estimates that the company's free cash flow will increase at a constant rate of 7% a year and that the company's WACC is 10%. Harkleroad has $200 million of long-term debt and preferred stock, and 30 million outstanding shares of common stock. What is the estimated per share price of Harkleroad's common stock?
Question 2. Cartwright Brother's stock is currently selling for $40 a share. The stock is expected to pay a $2 dividend at the end of the year. The stock's dividend is expected to grow at a constant rate of 7% a year forever. The risk-free rate is 6% and the market risk premium is also 6%. What is the stock's beta?
Question 3. Bill plans to deposit $200 into a bank account at the end of every month. The bank account has a nominal interest rate of 8% and the interest is compounded monthly. How much will Bill have in the account at the end of 2.5 years (30 months)?